For personal use only Table of Contents
Chairman’s Report
Directors’ Report
Letter from Chair of the Remuneration Committee
Remuneration Report
Auditor’s Independence Declaration
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Financial Statements
Directors’ Declaration
Independent Audit Report to the Members
Corporate Governance Statement
Shareholder Information
Corporate Directory
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Chairman’s Report
Dear Shareholder,
Financial Year 2017 saw many positive developments in the business, with substantial progress having been
made in many areas.
Specifically, the Company signed the biggest contract in its history in August 2016 to deploy the Symphony
work-flow solution throughout groupm agencies in Europe and APAC.
Shortly following this announcement, the Company successfully completed an $18.0m capital raising to grow
its development capability, which has seen a doubling of development resources and a three-fold increase in
development output.
The Company also successfully deployed Symphony into three new markets for groupm, with a further three
markets having commenced deployment. The deployment cycle and timeline is improving with every
deployment, and larger markets are now in prospect.
The Company also executed two significant data integrations with Bluekai and Lotame, adding substantial
value to the Adslot Media product in terms of audience targeting for media buyers.
High quality publishers also continue to join the Adslot Media platform, including the likes of TripAdvisor, The
Guardian, Bloomberg, Hearst, Aol, USA Today, Condé Nast, Motley Fool and Business Insider.
More recently, the Company received commitments from two large agencies to embed trading of Automated
Guaranteed via Adslot’s Symphony platform in two markets – one in APAC and one in Europe.
All these achievements demonstrate meaningful progress, and see the Company better placed to achieve its
growth objectives over the coming quarters and years. However, this progress was not fully reflected in the
Company’s underlying financial performance in FY17.
Importantly, the Company’s key strategic revenue source, Trading Technology revenues, grew by 27% in
FY17. This growth was driven by 45% growth in underlying Licence Fees, due mostly to the groupm Symphony
contract signed in August 2016. A full year treatment of growth in Licence Fees would have seen year-on-
year growth closer to 63%.
However, the more significant revenue contribution anticipated from Trading Fees did not materialise in FY17.
The Company has however established a much stronger position from which to realise material Trading Fee
revenues in FY18 and beyond, including commitments from Symphony clients to adopt Adslot’s Automated
Guaranteed trading technology.
The Company has also continued to invest in its US sales organisation, where Adslot Media is sold direct to
agencies, and more recently, direct to advertisers.
As anticipated, the Company saw a decrease in non-strategic revenues (Services and Adserving) in FY17,
which offset much of the growth in strategic (Trading Technology) revenues. Adserving revenues are expected
to continue to decline, which will allow for associated infrastructure costs to be reduced and a greater Company
focus on the larger global revenue opportunity of Trading Technology.
So, while FY17 did not realise the revenue growth in Trading Fees as expected, it further established the
foundations from which the business can accelerate growth in FY18 and beyond.
These foundations are a significant and important strategic asset for the business. As with any marketplace,
success comes from building the volume of both supply and demand on the platform. Both sides of the
marketplace are growing with real intent. Whilst campaign commitments from agencies and brands remains
nascent and unpredictable, the effort to date in building these relationships at scale is expected to reap
significant rewards for the business as volume trading on the marketplace gathers pace.
In FY18, shareholders can expect to see a continued increase in Licence Fees, driven by both further market
deployments of Symphony for groupm in APAC and Europe; and potentially by securing additional new agency
customers for Symphony in those markets. This will in turn grow Adslot’s sources of demand, which will drive
future Trading Fees.
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Shareholders can also expect to see a marked increase in Trading Fees, driven by new work practices
embedded within key agency customers in Europe and APAC; and the US sales and marketing team seeing
results from significant sales pipeline development with major brand advertisers in the last three to six months.
On the supply side, the Company will also continue to sign and integrate with major publishers’ ad servers
globally.
From a product point of view, the Company continues to improve the Symphony - Adslot integration to create
a singular product experience. The Company’s increased investment in R&D will assist in this ongoing
initiative, as well as creating continued feature enhancements to enable data-driven buying decisions -
ultimately delivering better campaign efficiency and effectiveness.
More broadly, the Company will continue to strive for organisational excellence, and continue to build a strong
performance culture and execution capability across its global organisation.
In summary, the Company is in a much stronger position than it was twelve months ago, and much closer to
realising an increasingly larger opportunity. The significant progress made in FY17 is expected to be better
reflected in the Company’s financial performance in FY18 and beyond.
In closing, I’d like to take this opportunity to thank our employees and our loyal shareholders for continuing to
support the Company throughout what has been another year of meaningful progress.
Yours sincerely,
Andrew Barlow
Chairman
Adslot Ltd
27 September 2017
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Directors’ Report
Your Directors present their report, together with the financial report of Adslot Ltd ACN 001 287 510 (‘the Company’) and
its controlled entities (‘the Group’) for the financial year ended 30 June 2017 and the auditor’s report thereon.
Information on Directors
Mr Andrew Barlow, Mr Adrian Giles, Mr Ian Lowe, Mr Ben Dixon, Mr Quentin George and Ms Sarah Morgan were directors
for the whole financial year and up to the date of this report.
Mr Geoff Dixon resigned from his appointment as director on 1 December 2016.
Mr Andrew Barlow
Non-Executive Chairman
(Age 44)
Andrew Barlow is the founder of Adslot and an experienced technology entrepreneur. Prior to Adslot,
Mr Barlow co-founded Hitwise with Adrian Giles in 1997, was Chairman and Managing Director of
Hitwise from 1997 – 2000, and Director of R&D from 2000 – 2002. Hitwise was ranked one of the Top
10 fastest growing companies by Deloitte for five years running, before being sold to Experian Group
(LSX.EXPN) in May 2007. Mr Barlow is also the Founder of Venturian, a privately-owned venture
capital fund with investments in early-stage technology companies with unique IP, highly scalable
business models and global market potential. Mr Barlow was also Founder and CEO of Max Super,
an online retail superannuation fund sold to Orchard Funds Management in 2007.
Mr Barlow is a director of Nitro Software, Inc.
Mr Adrian Giles
Non-Executive Director
(Age 43)
Adrian Giles is an entrepreneur in the Internet and Information Technology industries. In 1997 Mr Giles
co-founded Sinewave Interactive which pioneered the concept of marketing a website using search
engines and was the first company in Australia to offer Search Engine Optimisation (SEO) as a service.
In 1997 Mr Giles co-founded Hitwise which grew over 10 years to become one of the most recognised
global internet measurement brands in the USA, UK, Australia, NZ, Hong Kong, and Singapore. Whilst
positioning the company for a NASDAQ listing in early 2007 Hitwise was sold to Experian (LSX: EXPN)
in one of Australia’s most successful venture capital backed trade sales.
Mr Giles is also Chairman of Market Engine, a global retailing platform for Asian marketplaces and
Chairman of Proquo, an Australian small business marketplace joint venture between Telstra and NAB.
Mr Giles is Chair of the Remuneration Committee.
Mr Ian Lowe
CEO and Executive Director
(Age 47)
Ian Lowe is one of Australia’s most experienced digital media executives, having built and run a number
of successful global media technology companies from Australia. He has also forged an impeccable
reputation in the advertising, media and technology community domestically and internationally, and
has a deep understanding of both agency (demand-side) and publisher (supply-side) businesses.
Mr Lowe previously held the role of Chief Executive Officer of Facilitate Digital Ltd, and prior to that,
worked for and managed numerous other media and media technology businesses including Traffion,
Red Sheriff, PMP Limited, and George Patterson Bates.
Mr Ben Dixon
Executive Director
(Age 43)
Ben Dixon’s career in the advertising industry goes back over 19 years and includes roles at several
large multinational agency groups including DDB and Mojo. He has wide experience across both the
media buying and account management fields having held senior positions directing accounts for
advertisers such as Telstra and Kraft Foods. In particular he was responsible for the development and
implementation of e-commerce and online strategies across a number of advertisers.
In late 1999 Ben conceptualised and then co-founded Facilitate Digital Pty Ltd, assuming the role of
General Manager. In the subsequent 3 years he played an integral role in steering the business through
an industry collapse to a position of strength. Ben was appointed Chief Executive Officer of Facilitate
when Adslot acquired it in December 2013.
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Mr Quentin George
Non-Executive Director
(Age 47)
Quentin George is one of the advertising industry’s most credentialed and respected thought leaders.
Based in the United States, Mr George has previously served as the Chief Digital and Innovation
Officer at IPG Mediabrands, where he was responsible for overseeing $2B in digital media spend
across global media agency networks, as well as specialist digital agencies for Fortune 500 brands.
Mr George has also previously held the positions of Global Head of Digital Media and Strategic
Innovation, and President, Global at Universal McCann. In 2008, Mr George led the team that
architected and built the industry’s first ever, standalone programmatic media-buying agency,
Cadreon, which he successfully grew into a multi-national organisation encompassing North America,
Europe and Asia-Pacific.
Mr George has also previously served on the customer advisory boards of Google, Microsoft
Advertising, Yahoo! and AOL. He has also served on high-profile industry advisory boards including
the Internet Advertising Bureau (IAB) and the American Association of Advertising Agencies (AAAA’s),
and has held senior leadership roles at digital agencies such as Razorfish and Organic.
Ms Sarah Morgan
Non-Executive Director
(Age 47)
Sarah Morgan is an experienced corporate finance advisor. Most of her career was as a Director of
independent corporate advisory firm Grant Samuel. Over this time Ms Morgan was involved in a large
number of transactions including public company M&A, IPOs, capital raisings (debt & equity), asset
acquisitions and divestments, and company and business valuations, across a broad range of
industries.
Ms Morgan is a non-executive director of Hong Kong based Luxe City Guides and the National Gallery
of Victoria Foundation.
Directorships of other Australian Listed Companies during the past 3 years:
Hansen Technologies Limited (ASX:HSN) from October 2014 to current
Future Generation Global Investment Company (ASX:FGG) from July 2015 to current.
Ms Morgan is Chair of the Audit and Risk Committee.
Mr Brendan Maher
Company Secretary
(Age 49)
Brendan Maher joined the Company in 2010 as a qualified Chartered Accountant and has over 27
years’ experience gained both in Australia and overseas with Arthur Andersen, National Westminster
Bank and Skilled Group Limited.
Mr Maher has extensive experience in financial reporting, corporate transactions and was Company
Secretary at Skilled Group Limited prior to joining Adslot.
Mr Maher is a member of the Institute of Chartered Accountants in Australia and New Zealand, and
also a member of the Australian Institute of Company Directors.
Mr. Maher resigned as Company Secretary on 14 July 2017. Mr. Ben Dixon was appointed as the
interim Company Secretary until the commencement of the new Company Secretary on 30 August
2017.
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Directors’ Report (Continued)
Directorships of other listed companies
Other than those disclosed on pages 4 to 5 of this Annual Report no director holds a Directorship in any other listed
companies in the three year period immediately before the end of the financial year.
Directors’ shareholdings
The following table sets out each director’s relevant interest in shares or options in shares of the Company as at the date
of this report.
Directors
Ordinary Shares
Share Rights
ESOP Shares
Mr Andrew Barlow
Mr Adrian Giles
Mr Ian Lowe
Mr Ben Dixon
Mr Quentin George
Ms Sarah Morgan
#
#
#
50,050,000
20,069,707
11,352,839
37,103,660
-
170,000
-
-
17,000,000
-
-
-
-
-
-
-
1,000,000
-
ESOP Shares
Performance Rights
#
-
-
-
500,000
-
-
Remuneration of directors and senior management
Information about the remuneration of directors and senior management is set out in the remuneration report of this
directors’ report.
Directors’ Meetings
The following table sets out the number of meetings of the Company’s Directors held during the year ended 30 June 2017
and the number of meetings attended by each Director.
Directors
Mr Andrew Barlow
Mr Ian Lowe
Mr Adrian Giles
Mr Geoff Dixon
Mr Ben Dixon
Mr Quentin George
Ms Sarah Morgan
Board of Directors
Held
Attended
Remuneration Committee
Held
Attended
Audit and Risk Committee
Attended
Held
14
14
14
6
14
14
14
14
14
14
4
14
12
14
6
-
6
-
-
6
-
6
-
6
-
-
6
-
-
-
3
1
-
-
3
-
-
3
1
-
-
3
Principal activities
Adslot Ltd derives revenue from three principal activities:
1. Trading Technology - comprises Adslot, a leading global media trading technology, and Symphony, market-leading
workflow automation technology for media agencies.
2. Services - comprises digital marketing services - provided by the company’s Webfirm division - and project-based
customisation of Trading Technology.
3. Adserving - technology that enables advertisers to deliver, measure and optimise the performance of online display
advertising.
Operating Results
Underpinned by a year on year increase of 27% in Trading Technology revenues, Consolidated Group revenues for the
FY17 period were $9,007,016, an increase of 6% versus the year prior ($8,513,782).
The Consolidated Group operating loss before interest, income tax, depreciation and amortisation (EBITDA) of $4,239,255,
an increased loss versus prior year of $3,260,724 or 30%.
The Consolidated Group operating loss of $8,630,187 is 6% higher than the loss for the prior year of $8,138,485.
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Review of Operations
In the 12 months to 30 June 2017 a significant number of business and product milestones were achieved in the execution
of the Company’s growth strategy, including:
27% growth in Trading Technology revenues (FY17)
GroupM contract sign off (August 2016)
$18m capital raising (October 2016)
Successful execution of post investment operating plan (October 2016 – June 2017)
Successful new market deployments of Symphony (throughout FY17)
Data Integrations with Bluekai (Oracle) and Lotame (April/May 2017)
Assembly of unique, premium ‘at scale’ marketplace continues - significant publishers secured
Commitments from Symphony agencies to progressive adoption of Automated Guaranteed (June Qtr 2017)
These achievements in combination see the Company well positioned to accelerate growth in Trading Technology
revenues in FY18 and beyond.
Significant Achievements
27% growth in Trading Technology revenues
Trading Technology revenues were the Group’s growth driver, increasing by 27% against the prior year and delivering the
fifth consecutive year of growth.
Trading Technology revenues comprise Symphony, a market-leading workflow automation technology (from which the
Company derives Licence Fees) and Adslot, a leading global media trading technology (from which the Company derives
Trading Fees). Both platforms provide purpose built interfaces for media agencies (buyers) and publishers (sellers) to
plan, negotiate and trade online display advertising.
Licence Fees
FY17 growth in Trading Technology revenues is attributable to growth in Licence Fees, which grew 45% year on year from
$3.197m in FY16 to $4.621m in FY17. Growth in Licence Fees was in turn attributable to the global Symphony contract
signed with GroupM in August 2016, the full year impact of which would have been 63% annual growth in Licence Fees.
Signed in August 2016, the GroupM contract will see Symphony deployed into 20+ new markets across APAC and EMEA
over multiple years. New market deployments require close consultation with both GroupM regional management, and
the constituent agencies within GroupM that adopt the technology.
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Review of Operations (Continued)
YoY Licence Fees
$5,000,000
$4,000,000
$3,000,000
$2,000,000
$1,000,000
$0
Licence Fees
FY13
FY14
FY15
FY16
FY17
+56%
+64%
+75%
+45%
Post contract sign off, Adslot and GroupM collaborated closely to build interfacing teams and transparent, measurable
processes to support future deployments. The time required to establish and refine these frameworks took several weeks
longer than anticipated, however by the conclusion of the December quarter (2016) these were finalised and functioning
as intended. As a direct result the cadence of new market deployments improved in 2H FY17, and is expected to continue.
This sets the Company up for new activations into larger markets in FY18, which in turn generate larger Licence Fees.
Trading Fees
Where the Company made strong progress in FY17 relating to Licence Fees, the expected levels of growth in Trading
Fees have not materialised in the timeframe anticipated.
YoY Trading Technology Revenue
$6,000,000
$5,000,000
$4,000,000
$3,000,000
$2,000,000
$1,000,000
$0
Trading Fees
Licence Fees
There are a number of contributing factors to the timeframe in which Trading Fees will materialise at scale. A consideration
of these factors including further background to the significant progress already made follows:
FY13
FY14
FY15
FY16
FY17
Adslot has validated the market opportunity for Trading Fees both technically (the Adslot Automated Guaranteed
technology works and is scalable) and commercially (multiple pilots have been successfully conducted with
multiple agencies, brands and publishers in multiple jurisdictions).
The Company is now focused on transitioning from validation to ‘early adoption’ by securing Trading Fees via
repeatable, big ticket trading activity at scale.
Transition to the ‘early adoption’ phase requires agencies to commit to a change management process, by
disrupting their current processes and workflows (as inefficient as they are) to embed the Adslot technology. This
type of change management is not insignificant, and requires execution agency-by-agency and market-by-market.
Adslot already has a successful track record of being able to implement disruptive technology in the form of
Symphony, which also requires changing management practices and engagement with multiple agency
stakeholders.
Adslot’s activation process for Automated Guaranteed continues to be refined. This process is less complicated
where agencies are already using or setting up Symphony. This means the Company has a sustainable
competitive advantage in markets where Symphony is deployed.
In step with process refinement, the Company has also made ongoing product refinements. These product
refinements have been informed by close collaboration and deeper engagement with a select number of more
significant prospects.
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In the June quarter of 2017, commitments were secured from two significant agencies, one in Europe, and one
in APAC, to undertake a phased activation of Adslot’s Automated Guaranteed technology. Explicit within these
agency commitments is their recognition and commitment to the associated change management.
These activations represent the first of similar commitments the Company is focused on securing from Symphony
(and non Symphony) agencies in the US, UK, Europe and APAC. The activations are also allowing Adslot to
further develop its deployment methodology to facilitate larger future deployments and trading activity at scale.
Further commitments from agencies of this kind will ultimately drive medium-to-long term sustainable growth in
Trading Fees.
While Trading Fees remain nascent and unpredictable, this is not reflective of the broader market opportunity nor
the Company’s confidence it will capture more meaningful Trading Fees over the first half of FY18 and beyond.
A number of factors see the Company well positioned to capitalise on this large, global opportunity:
Adslot continues to successfully deploy Symphony, and with it grow the volume of media spend traded via it’s
technology, the number of media planners/buyers reliant on it (Symphony) and the geographical footprint of
users.
Adslot continue to sign significant publishers in key markets such as US, UK and Australia.
Adslot’s working capital position ($14.32m cash at June 30, with a further $2.7m anticipated in October via the
R&D Rebate Scheme).
Adslot’s Automated Guaranteed platform remains the leading technology of its kind globally.
Recent major feature releases, including enhanced audience targeting, are resonating strongly with agencies
and advertisers of all profiles.
Advertisers pushing for greater transparency is translating to a renewed focus on buying higher quality inventory,
which is Adslot’s core proposition;
The Operating Plan outlined in the Use of Funds disclosed as part of the Company’s capital raising in October
2016, has been executed successfully, within budget and on time - the stated objective of which was to bring
greater velocity to the Company’s innovation cycle. In the seven months since the capital raising was concluded,
Adslot’s R&D team has doubled, and output has increased threefold with further gains expected. This allows the
Company to assign more R&D resources as required in support of revenue opportunities.
The Company therefore stands behind the outlook shared in the 1H FY17 results, that Trading Fees will emerge
in 1H FY18 to make a more meaningful contribution.
As adoption of Automated Guaranteed builds and becomes more predictable in 1H FY18, the Company intends to
commence releasing key business metrics to quantify its progress. A first release of these business metrics will be included
in the September quarter Trading Update, and will include the quantum of advertising purchased via Adslot’s Automated
Guaranteed technology.
GroupM contract sign off
In August 2016 the Company announced it had signed a multi-year contract with GroupM . A division of WPP, GroupM is
a multi-national media agency group and the world’s largest media buyer.
The global contract will see GroupM activate Adslot’s workflow and trading automation platform Symphony into a
significant number of new markets, including an immediate and ongoing commitment to multiple deployments in Europe
and APAC.
The contract also sees GroupM renew their commitment to Adslot across APAC, where Symphony has already been
deployed in a number of markets including Australia, China and Japan.
The contract has a number of material implications, including:
Significant additional revenue in the form of Licence Fees as new markets are deployed
Global deal with immediate focus on multiple market deployments across Europe and APAC
Establishes Adslot as a truly global solution via:
Fully funded market entry for each new country of deployment
o
o
a new customer footprint in the EMEA region, and
an expanded customer footprint in the APAC region.
In combination with organic growth from existing customers and other new business, the value of media executed
via Symphony is expected to increase from circa $3 billion per annum to circa $7 billion per annum over the next
2+ years.
As a result, Adslot’s Automated Guaranteed Trading Fee opportunity via the Symphony-Adslot integration will
effectively double.
Market-ready product can be sold into other agency groups as each new market activated.
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Review of Operations (Continued)
$18m capital raising
In October 2016, the Company successfully concluded an $18m Entitlement Offer and Placement. The capital raising was
conducted in order to:
Expand the R&D team in support of;
o
o
(a) Symphony deployments in new markets for GroupM , and
(b) increase the velocity of new feature development
Expand the Sales organisation
Increase marketing activity and sales enablement.
Successful execution of post investment Operating Plan
Immediately prior to the October 2016 capital raising, the Company disclosed some of the key Operating Plan objectives
under Use of Funds. These included:
Expanding the product and development teams to nearly double the size of the development team in the first
year, and by 18 months have grown the development teams by 150%.
Increasing sales and marketing activity to further accelerate Trading Technology growth
By June 30 2017, the Company had met its product and development team growth objective. Despite a competitive
environment for high quality technology talent this was also achieved via a newly created internal recruitment function to
minimize recruitment costs. Economies of scale and improvements to development processes meant that by the end of
the June quarter 2017, output from the product and engineering teams had increased threefold, while the size of the
product and engineering team had less than doubled.
In conjunction with the agile development methodology utilised by Adslot, this means the Company is better placed to
manage larger projects, more of them, and respond more quickly to revenue generating opportunities as they materialise.
In addition, Adslot’s sales and marketing organisation was strengthened with key hires, including:
Appointment of US Market Lead
Expansion of US sales organisation with two new sales hires
Appointment of NY based Chief Marketing Officer (CMO)
Successful new market deployments of Symphony
Over the FY17 period, Adslot successfully deployed Symphony into multiple new markets including Austria, Taiwan and
Turkey. As a result, the Symphony user base increased by 11% from 10,604 to 11,727 over the corresponding period. In
FY17 the Company also refined its new market deployment blueprint in the areas of project management and process
design. The improved efficiency resulting has seen the cadence of new market activations improve, and deployments into
larger markets in FY18 and beyond are anticipated.
The Company has also commenced a further three market activations which are now in various stages of deployment.
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Deployments into larger markets will positively impact the following:
Revenue growth - Licence Fee revenue is driven by both the number and size of markets.
Greater access to new demand to generate Trading Fees – Trading Fees are expected to emerge and exceed
Licence Fees as the integration of Symphony and Automated Guaranteed continues to improve and agencies
look to automate all aspects of media trading in the future.
Incumbency - increases the user base of media planners and buyers reliant on the Symphony platform.
Expanding global footprint – expands Adslot’s customer footprint and with it the Company’s ability to offer
regional and global coverage to other multi-national agency groups. The Company has fielded inbound interest
in Symphony from other multinational agency groups, in the EMEA region in particular.
Data Integrations with Bluekai (Oracle) and Lotame
In April and May 2017 respectively, Adslot launched its Guaranteed Audience feature via integrations with audience data
from industry leaders Bluekai (Oracle) and Lotame. These audience data integrations provide media buyers using Adslot
with access to approximately 10,000 audience profiles across the catalogue of participating Adslot publishers. This
capability provides advertisers with more granular targeting of their advertising message, and is considered desirable as it
aligns more closely with a specific target audience, improves campaign performance and with it ROI.
The Bluekai and Lotame audience data integrations significantly extend the breadth and diversity of audience profiles
available via Adslot. This aligns with the Company’s objective to provide comparable audience targeting to
RTB/programmatic technology, and with it the size of the market opportunity.
Adslot will continue to enhance this area of its Automated Guaranteed offering, with particular focus on productising the
ability of an advertiser/agency to target and trade an audience defined using their own data, across multiple publisher sites.
Assembly of unique, premium ‘at scale’ marketplace continues - significant publishers secured
A number of significant publishers were secured in FY17, including:
Securing publishers of the quality and scale such as these on an ongoing basis remains a high priority objective for the
Company:
Expands the diversity and value associated with the Adslot publisher catalogue generally
Securing publishers critical to specific advertisers makes Adslot technology more attractive to those advertisers
As adoption at scale emerges, ensures Adslot is well positioned to service growing demand
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Review of Operations (Continued)
Commitments from Symphony agencies to progressive adoption of Automated Guaranteed
The Company has focused sales efforts in Europe and APAC on media buyers/agencies that are already using the
Symphony platform to plan and buy online display advertising. This scenario benefits from the incumbency Symphony
affords and an established relationship. The sales process itself is characterised by enterprise sale dynamics where the
agency typically views the adoption of Adslot’s trading technology as an innovation that encompasses the full breadth of
their relevant media buying activity.
As a result, adoption usually requires support from various stakeholders across the agency organisation, including
executive management, digital leads, operational leads and finance.
In the June quarter (2017), Adslot secured commitments from two significant agencies, one in Europe, and one in APAC,
to undertake a phased activation of its Automated Guaranteed technology.
The phased activation approach is different for each of the two agencies; one will be driven by activating one advertiser
account at a time, the other by activating relevant groups of relevant publishers across multiple advertiser accounts.
In both cases agencies will use the integrated Symphony-Adslot interface.
Likely Developments and Business Strategies
Trading Fees will emerge in 1H FY18 to make a more meaningful contribution
The Company continues to make progress selling its Automated Guaranteed trading technology in key markets including
US, UK, Europe and Australia. Sales activity to drive adoption of Adslot’s Automated Guaranteed technology is being
targeted at Symphony agency customers in Australia and Europe, where the sophistication of those markets and the
incumbency of Symphony provides opportunity and access. In US and UK markets, where the Symphony client base is
less significant, sales activity is focused on (non Symphony) agencies and advertisers direct.
The Company remains confident Trading Fees will make a more significant revenue contribution in 1H FY18 and
beyond, due in large part to:
In the June quarter of 2017, commitments were secured from two significant agencies, one in Europe, and one
in APAC, to undertake a phased activation of Adslot’s Automated Guaranteed technology.
Major feature enhancements including the audience data integrations announced in April/May 2017, are
resonating strongly with agencies and advertisers of all profiles, including non Symphony agencies.
Advertisers pushing agencies for greater transparency is translating to a renewed focus on buying higher quality
inventory, which is Adslot’s core proposition.
Adslot’s Automated Guaranteed platform remains the leading technology of its kind globally.
Licence Fees will continue to grow into FY18 and beyond
Off the back of successful new market activations of Symphony for GroupM , Licence Fees will grow in FY18 and beyond
based on the following:
A full year of Licence Fee revenues derived from new market activations in Austria, Taiwan and Turkey
A further three new market activations have commenced and are in various stages of scoping and development
Larger markets are anticipated for activation in FY18 and beyond
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Further benefits from additional investment in R&D and sales/marketing will emerge
The Company expects further benefits will be realised as a result of its ongoing investment in R&D and sales/marketing.
These include:
The material increase already seen in product development velocity will continue to improve (see the section
above titled ‘Successful execution of post investment Operating Plan’).
By the end of FY18 the integration of Symphony and Adslot platforms will be close to reaching the single product
experience objective.
Increased marketing activity in FY18 will expand market awareness.
Increased marketing and sales activity will significantly increase the Company’s sales pipeline and conversion.
As revenue grows net cash outflows will recede
Adslot’s FY18 Operating Plan does not contemplate additional growth in headcount, and so operating costs are expected
to remain in line with that of the June quarter 2017. As Trading Technology revenues continue to grow, this will see net
cash outflows recede accordingly. Other factors contributing in combination to a decline in net cash outflows include:
Non strategic Services revenue is expected to remain flat but modestly profitable
Non strategic Adserving revenue is expected to decline significantly but contribute modest profit
Being a cloud based technology there are no significant increases in COS to support significant growth in Trading
Technology revenues
Revenue growth will drive a corresponding reduction in cash burn and lift in net margin
Matters Subsequent to the End of the Financial Year
There has not been any matter or circumstance occurring subsequent to the end of the financial year that has significantly
affected, or may significantly affect, the operations of the Group, the results of those operations or the state of affairs of
the Group in future years.
Environmental regulations
The Group’s operations are not subject to any significant environmental regulations under the Commonwealth, State or
any other country in which the entity operates.
Dividends
The Directors do not recommend the declaration of a dividend. No dividend has been declared or paid during the year.
Shares under option
There were no unissued shares or interests under option as at the date of signing this report.
Shares subject to rights
Details of unissued shares or interests subject to rights as at the date of signing this report are:
CEO Sign on Rights
Share price required (a)
Number of rights
Right to receive ordinary shares
Right to receive ordinary shares
Right to receive ordinary shares
Right to receive ordinary shares
Total
$0.200
$0.300
$0.400
$0.500
3,000,000
4,000,000
5,000,000
5,000,000
17,000,000
(a) Share price required to trade above a 30 day VWAP before entitlement to Right
13
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Review of Operations (Continued)
Executive Performance Rights
Issue Type
Issue or
Acquisition
Date
Performance Rights
26/11/14
Performance Rights
26/8/15
Performance Rights
27/06/16
Performance Rights
01/09/16
Issue
Price
$
Nil
Nil
Nil
Nil
Balance at
beginning
of the year
(Number)
Issued
during the
year
(Number)
Transfers
during the
year
(Number)
Forfeited
during the
year
(Number)
Balance at end
of the year
(Number)
5,309,523
1,955,000
600,000
-
-
-
(3,059,524)
(2,249,999)
-
(365,000)
(500,000)
1,090,000
(200,000)
-
400,000
-
8,300,000
-
(550,000)
7,750,000
7,864,523
8,300,000
(3,624,524)
(3,299,999)
9,240,000
Indemnification and Insurance of Officers
The Company has during the financial year, in respect of each person who is or has been an officer of the company or a
related body Corporate, made a relevant agreement for indemnifying against a liability incurred as an officer, including
costs and expenses in successfully defending legal proceedings.
Since the end of the financial year, the Company has paid premiums to insure all directors and officers of Adslot Ltd and
the Adslot Group of companies, against costs incurred in defending any legal proceedings arising out of their conduct as
a director and officer of the Company, other than for conduct involving a wilful breach of duty or a contravention of Sections
232(5) or (6) of the Corporations Act 2011, as permitted by section 241A(3) of the Corporations Act. Disclosure of the
premium amount is prohibited by the insurance contract.
Proceedings on behalf of the Company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on
behalf of the company, or to intervene in any proceedings to which the company is a party, for the purpose of taking
responsibility on behalf of the company for all or part of those proceedings.
No proceedings have been brought or intervened in on behalf of the company with leave of the Court under section 237 of
the Corporations Act 2001.
Auditor’s Independence Declaration
The auditor’s independence declaration for the year ended 30 June 2017 has been received and can be found on page 25
of the financial report. Details of amounts paid or payable to the auditor for non-audit services provided during the year are
outlined in Note 19 to the financial statements.
The Directors are satisfied that the provision of non-audit services, during the year by the auditor is compatible with the
general standard of independence for auditors imposed by the Corporations Act 2001.
14
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Letter from Chair of the Remuneration Committee
Dear Shareholders,
During the last 12 months, the board has invested considerable time and effort to review the Adslot Remuneration Plan.
The objectives were to assess the relevance of the current plan to ensure it is effective at:
a) Attracting the highest quality employees;
b) Retaining the best performing employees;
c) Aligning employees with shareholder outcomes;
d) Aligning employee motivation to a cascading set of key performance indicators (KPI’s) that drive the most optimal
strategic outcomes for the business;
e) Ensuring it aligns with the latest industry best practice.
The review considered the entire remuneration framework including:
-
-
-
base salaries, short term incentives (STI’s), and long term incentives (LTI’s);
how to consistently apply the most optimal plan across the organisation;
and how to balance simplicity of the plan with the tax outcomes for employees and the company.
The outcome and recommendations of that process were then independently reviewed by third party experts to ensure
compliance from a tax and legal point of view.
Adslot – FY 2018 Remuneration Framework
The framework chosen outline’s considerations for Base Salary (Fixed); Short Term Incentives (STI); and Long Term
Incentives (LTI). These are further explained below.
Base Salary (Fixed Remuneration)
Consisting of a base salary, superannuation and any non-monetary benefits.
The base salary is determined by recommendation from the CEO (for the executive and wider team) and the remuneration
committee (for the CEO). It is designed at a level to competitively attract and retain the best available employees in the
markets in which we operate whilst also considering the growth stage, revenue and capital of the company. It is also linked
to performance during an ongoing quarterly review process.
Short Term Incentives (STI’s)
STI awards are set within an agreed percentage range of the employee’s base salary and consist of a cash payment
attached to a recently revised key performance indicator (KPI) framework that ties the desired business outcomes to a
cascading set of clear deliverables (KPI’s) for individuals.
We set a maximum percentage of STI to base salary and provide a guideline for an acceptable range of STI based on
roles and functions across the organisation.
Key benefits of this approach are:
-
-
it makes the decision on the quantum of the STI more consistent across the organisation and consistent with
industry norms; and
is within an acceptable range tied to a base salary that is relevant and market tested.
15
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Letter from Chair of the Remuneration Committee (Continued)
Long Term Incentives (LTI’s)
Like the STI, every LTI award is calculated based on a percentage of the employee’s base salary.
The resulting LTI to be offered to employees each year is an option to acquire an Adslot share in the future, with the
Company having the discretion as to the amount of the exercise price which is payable and the nature of the vesting
conditions which need to be satisfied for an employee to acquire a share.
Vesting conditions are designed to:
-
-
-
be consistent with industry best practice;
ensure the incentive is attached to a long-term commitment; and
align employee benefits directly with positive shareholder outcomes.
Further information about the plan will be provided to shareholders in the lead up to the 2017 Annual General Meeting. It
is hoped that shareholders will see the outcomes of the review as an improvement and express their support by voting in
favour of the relevant resolutions at the AGM.
Sincerely,
Adrian Giles
Chair – Remuneration Committee
Adslot Ltd
28 August 2017
16
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Remuneration Report
The remuneration report is set out under the following headings:
Section 1:
Non-executive directors’ remuneration
Section 2:
Executive remuneration
Section 3:
Details of remuneration
Section 4:
Executive contracts of employment
Section 5:
Equity-based compensation
Section 6:
Equity holdings and transactions
Section 7:
Other transactions with key management personnel
Section 1: Non-executive directors’ remuneration
Non-executive directors’ fees are reviewed annually and are determined by the Board. In making its determination it takes
into account fees paid to other non-executive directors of comparable companies.
Non-executive directors’ fees are within the maximum aggregate limit of $350,000 per annum agreed to by shareholders
at the Annual General Meeting held on 30 November 2009. To preserve the independence and integrity of their position,
non-executive directors do not receive performance-based bonuses.
For the 2017 financial year, the Chairman’s fees are $75,000 per annum. Non-executive directors’ fees are $50,000 per
annum. In addition, the Chair of the Audit & Risk Committee receives a further $25,000 in recognition of the additional
workload of that position.
Section 2: Executive remuneration
The Board of Directors are responsible for determining and reviewing compensation arrangements for key management
personnel and the executive team. In June 2011, the Company established a Remuneration Committee who now makes
recommendations on remuneration of key management personnel to the Board.
The Board assesses the appropriateness of the nature and amount of emoluments of these employees on a periodic basis
by reference to relevant employment market conditions with the overall objective of ensuring maximum stakeholder benefit
from the retention of high quality executives. Executives’ remuneration consists of a fixed cash component, short-term
incentives in the form of cash bonuses, and long-term incentives in the form of equity-based compensation linked to the
long term prospects and future performance of the Company. The inclusion of equity-based compensation in executives’
remuneration provides a direct link between their remuneration and shareholder wealth, otherwise there are no direct
relationships.
In providing the Company’s performance and benefits for shareholder wealth, the Board have regard to the following
indices in respect of the current financial year and the previous four financial years:
Item
EPS (cents)
Net loss ($)
2017
(0.70)
2016
(0.77)
2015
(0.89)
2014
(1.20)
2013
(0.94)
8,630,187
8,138,485
9,205,521
10,095,562
6,460,947
Share price at 30 June ($)
0.051
0.110
0.090
0.115
0.044
17
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Remuneration Report (continued)
Section 3: Details of remuneration
Details of the remuneration of the directors and the key management of the Company and its controlled entities are set out
in the following tables.
The key management personnel of Adslot Ltd and its controlled entities include the following directors and executive
officers:
Directors
Position
Date appointed/resigned
Mr Adrian Giles
Non-Executive Director
Appointed 26 November 2013
Mr Andrew Barlow
Non-Executive Director
Appointed 16 February 2010
Non-Executive Chairman
Appointed 26 November 2013
Mr Ian Lowe
Chief Executive Officer
Executive Director
Appointed 8 October 2012
Appointed 8 October 2012
Mr Ben Dixon
Executive Director
Appointed 23 December 2013
Mr Geoff Dixon
Non-Executive Director
Appointed 23 December 2013
Resigned 01 December 2016
Mr Quentin George
Non-Executive Director
Appointed 14 June 2014
Ms Sarah Morgan
Non-Executive Director
Appointed 27 January 2015
Executive Officers
Mr Brendan Maher
Company Secretary / Chief Financial Officer
Appointed 15 November 2010
Resigned 14 July 2017
Mr Tom Peacock
Group Commercial Director
Appointed 23 December 2013
18
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Group
2017
Name
Short-term benefits
Salary
& fees
$
Bonus
Other
$
$
Executive directors
Mr I Lowe
Mr B Dixon
355,750
206,000
20,623
10,000
Non-executive directors
Mr A Giles
Mr A Barlow
Mr G Dixon (i)
Mr Q George
Ms S Morgan
50,000
68,493
19,026
50,000
68,493
-
-
-
-
-
Other key management personnel
Mr B Maher (ii)
Mr T Peacock
264,296
206,000
10,000
10,000
Totals
1,288,058
50,623
-
-
-
-
-
-
-
-
-
-
Long Term
Benefits
Long
Service
Leave
$
-
3,975
-
-
-
-
-
(16,322)
7,744
Post-
employment
benefits
Super-
annuation
Share-based payment
Shares1
Rights1
Total
$
$
$
$
19,616
19,308
-
6,507
1,807
-
-
-
-
-
-
12,321
6,507
19,616
19,308
-
-
-
-
395,989
18,300
257,583
-
-
-
-
-
50,000
75,000
20,833
62,321
75,000
19,600
22,553
297,190
265,605
(4,603)
92,669
12,321
60,453
1,499,521
1 Awards of Shares and Rights are governed by the rules of the Company’s ESOP. Given the forfeiture conditions contained
in that Plan, these awards are in substance rights issues.
(i)
(ii)
to 01 December 2016
includes a long service leave provision reversal brought forward from 2016. Mr Maher tendered his
resignation in April 2017, as such will not be entitled to any long service leave payout based on Long
Service Leave Act 1992 No. 83 of the Victoria State legislation.
Bonuses
Bonuses appearing in the table above were paid for the year ended 30 June 2017 (but relate to the performance from the
prior year) as follows:
Name
Amount Paid
Amount
available in
future
periods
Total Bonus
Opportunity
$
$
$
Assessment Criteria
Mr I Lowe
Mr B Dixon
Mr B Maher
20,623
10,000
10,000
Mr T Peacock
10,000
-
-
-
-
150,000 Company performance to budget, product development and launch,
and client & partnership signings.
55,000 Performance related KPI’s.
45,063 Division performance, governance, reporting and performance
related KPI’s.
N/A (a) Performance related KPI’s.
(a) Not applicable as total bonus opportunity is based on a percentage of the Group’s performance.
No portion of the total bonus opportunity for key management personnel was forfeited.
19
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Remuneration Report (continued)
Section 3: Details of remuneration (Continued)
Group
2016
Name
Short-term benefits
Salary
& fees
$
Bonus
Other
$
$
Long Term
Benefits
Long
Service
Leave
$
Post-
employment
benefits
Super-
annuation
Share-based payment
Shares1
Rights1
Total
$
$
$
$
Executive directors
Mr I Lowe
Mr B Dixon
309,000
-
203,854
17,351
Non-executive directors
Mr A Giles
Mr A Barlow
Mr G Dixon
Mr Q George
Ms S Morgan
50,000
68,493
45,662
50,000
68,493
Other key management personnel
Mr B Maher
Mr T Peacock
252,838
205,500
-
-
-
-
-
-
-
Totals
1,253,840
17,351
-
-
-
-
-
-
-
-
-
-
-
8,969
19,308
20,818
-
-
-
-
-
-
28,572
328,308
279,564
-
-
-
-
-
50,000
75,000
50,000
75,744
75,000
-
-
-
-
-
-
6,507
4,338
-
25,744
6,507
-
7,628
5,745
19,308
19,308
19,743
89,891
47,620
38,096
347,137
358,540
22,342
96,094
135,378
114,288
1,639,293
1 Awards of Shares and Rights are governed by the rules of the Company’s ESOP. Given the forfeiture conditions contained
in that Plan, these awards are in substance rights issues.
Bonuses
Bonuses appearing in the table above were paid for the year ended 30 June 2016 (but relate to the performance from the
prior year) as follows:
Name
Amount Paid
Amount
available in
future
periods
Total Bonus
Opportunity
$
$
$
Assessment Criteria
Mr I Lowe
Mr B Dixon
Mr B Maher
Mr T Peacock
-
17,351
-
-
-
-
-
-
125,000 Company performance to budget, product development and launch,
and client & partnership signings.
55,000 Performance related KPI’s.
45,063 Division performance, governance, reporting and performance
related KPI’s.
N/A (a) Performance related KPI’s.
(a) Not applicable as total bonus opportunity is based on a percentage of the Group’s performance.
No portion of the total bonus opportunity for key management personnel was forfeited.
20
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Section 4: Executive contracts of employment
Formal contracts of employment for all members of the key management personnel are in place. Contractual terms for
most executives are similar but do, on occasions, vary to suit different needs. The following table summarises the key
contractual terms for all key management personnel.
Length of contract
Open ended
Fixed Remuneration
Remuneration comprises salary and statutory employer superannuation contributions.
Incentive Plans
Notice Period
Resignation
Retirement
Eligible to participate. Incentive criteria and award opportunities vary for each executive.
Members of the key management, including executive directors, have notice periods ranging from three weeks
to three months. The Chief Executive Officer and Chief Financial Officer have notice periods of 3 months.
Other Executives have notice periods ranging from 3 weeks to 1 month.
Employment may be terminated by giving notice consistent with the notice period.
There are no financial entitlements due from the Company on retirement of an executive.
Termination by the Company
The Company may terminate the employment agreement by providing notice consistent with the notice period
or payment in lieu of the notice period.
Redundancy
Payments for redundancy are discretionary and are determined having regard to the particular circumstances.
There are no contractual commitments to pay redundancy over and above any statutory entitlement.
Termination for serious
misconduct
The Company may terminate the employment agreement at any time without notice, and the executive will be
entitled to payment of remuneration only up to the date of termination.
Section 5: Equity-based compensation
Performance Rights over Shares
Shareholders approved at the November 2014 Annual General Meeting the creation of Performance Rights over Shares
which enables the Board to offer eligible employees the right to Performance Rights which convert to shares subject to the
executive’s performance against specific individual financial and non-financial performance criteria. No amounts are paid
or payable by the recipient on receipt of the right. The rights carry no voting rights. All rights are subject to service periods
which require the employees remain an employee of the Company.
The following table shows grants of share-based compensation to directors and senior management under the
Performance Rights Plan during the current financial year:
Name
Ben Dixon
Brendan Maher
Tom Peacock
Ben Dixon
Brendan Maher
Tom Peacock
Series
Nov 14
Nov 14
Nov 14
Sep 16
Sep 16
Sep 16
Balance at
beginning of the
year (Number)
Granted during
the year
(Number)
Expired during
the year
(Number)
Exercised
during the year
(Number)
Balance at the
end of the year
(Number)
500,000
833,333
666,667
-
-
-
-
-
-
(250,000)
(416,666)
(333,333)
(250,000)
(416,667)
(333,334)
500,000
750,000
750,000
-
-
-
-
-
-
-
-
-
500,000
750,000
750,000
2,000,000
2,000,000
(999,999)
(1,000,001)
2,000,000
The model inputs for Performance rights to shares granted during the year ended 30 June 2017 included:
Model Input
Grant Date
Assessment period
Exercise Price
Probability of Conversion to Shares
Price at Grant Date
PR # 17-1
01/09/16
2 years
-
50%
$0.125
21
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Remuneration Report (continued)
Section 5: Equity-based compensation (Continued)
The following table shows grants of share-based compensation to directors and senior management under the
Performance Rights Plan during the prior year ending 30 June 2016:
Name
Ben Dixon
Brendan Maher
Tom Peacock
Series
Nov 14
Nov 14
Nov 14
Balance at
beginning of the
year (Number)
Granted during
the year
(Number)
Expired during
the year
(Number)
Exercised
during the year
(Number)
Balance at the
end of the year
(Number)
750,000
1,250,000
1,000,000
3,000,000
-
-
-
-
-
-
-
-
(250,000)
(416,667)
(333,333)
500,000
833,333
666,667
(1,000,000)
2,000,000
No Performance rights to shares were granted to KMP during the year ended 30 June 2016.
Employee share ownership plan (ESOP)
In November 2012 the Company gained approval to establish an employee incentive scheme comprising the Adslot Limited
Share Option Plan and the Adslot Employee Share Trust.
Rights to shares are available to be issued to eligible employees based on the performance against specific individual
financial and non-financial key performance indicators. Any rights awarded are subject to a two-year service period and if
this service period is not met, the rights to shares will be forfeited by the eligible employee. Shares held by the Trust under
the scheme will have voting and dividend rights, and the right to participate in further issues pro-rata to all ordinary
shareholders.
The ESOP was replaced by the Performance Rights over Shares Plan in financial year 2015 and as such there have been
no new ESOP rights granted during the years ending 30 June 2015 to 30 June 2017.
There were no vesting of ESOP share-based compensation to directors and senior management under the ESOP for the
current financial year ended June 2017.
The following table shows the vesting of ESOP share-based compensation to directors and senior management under the
ESOP during prior year ending June 2016:
During the Financial year
Name
ESOP Series
Number
Granted
Number
Vested
% of Grant
Vested
% of Grant
Forfeited
Brendan Maher
Sept 2013
March 2014
Tom Peacock
Jan 2014
March 2014
-
-
-
-
763,602
561,526
176,928
2,823,072
100%
100%
100%
100%
0%
0%
0%
0%
22
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Rights over Shares
Upon commencement of employment (8 October 2012) Mr Lowe was granted the right to receive the following shares after
the share price of the Company trades above a 30 day volume-weighted average price (VWAP) as per the table below.
Each right would convert into one ordinary share of Adslot Ltd when the VWAP criteria is met. In the event of a Change
of Control of the Company some of these Rights would vest on a sliding scale between the take over price and required
VWAP of the next eligible series.
No amounts are paid or payable by the recipient on receipt of the right. The rights carry no voting rights. Some rights are
subject to escrow per the below table and all rights are subject to Mr Lowe remaining an employee of the Company.
Rights over shares movements during the financial year are summarised below:
Issue Type
Rights over shares
Rights over shares
Rights over shares
Rights over shares
Balance at
beginning of
the year
(Number)
3,000,000
4,000,000
5,000,000
5,000,000
Required
VWAP Price $
0.200
0.300
0.400
0.500
Granted during
the year
(Number)
Expired during
the year
(Number)
Exercised
during the year
(Number)
The following table shows grants of rights over shares to directors and senior management during prior year ending 30
June 2016:
17,000,000
-
-
17,000,000
Issue Type
Rights over shares
Rights over shares
Rights over shares
Rights over shares
Balance at
beginning of
the year
(Number)
3,000,000
4,000,000
5,000,000
5,000,000
Required
VWAP Price $
0.200
0.300
0.400
0.500
Granted during
the year
(Number)
Expired during
the year
(Number)
Exercised
during the year
(Number)
17,000,000
-
-
17,000,000
Balance at
the end of
the year
(Number)
3,000,000
4,000,000
5,000,000
5,000,000
Balance at
the end of
the year
(Number)
3,000,000
4,000,000
5,000,000
5,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Details of ESOP and other rights to ordinary shares in the Company provided as remuneration of directors and the key
management personnel of the Company are set out below:
Name
2017
2016
2017
2016
Number
$
Number
$
Number
$
Number
$
Rights Granted During the Year
Rights Vested During the Year
Directors
Mr Adrian Giles
Mr Ian Lowe
Mr Andrew Barlow
Mr B Dixon
Mr G Dixon (i)
Mr Q George
Ms S Morgan
Other Key Management Personnel
Mr B Maher
Mr T Peacock
(i)
to 01 December 2016
-
-
-
-
-
-
500,000
62,500
-
-
-
-
-
-
750,000
750,000
93,750
93,750
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
250,000
26,250
250,000
26,250
-
-
-
-
-
-
-
-
-
-
-
-
416,667
333,334
43,750 1,741,795
122,695
35,000
3,333,333
288,682
The assessed fair value at issue date of the rights granted to the executive is allocated equally over the period from issue
date to vesting date, and the amount is included in the remuneration tables above.
23
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Remuneration Report (continued)
Section 6: Equity holdings and transactions
The number of shares in the Company held during the financial year by each Director of Adslot Ltd and other key
management personnel of the Group, including their personally related parties, are set out below:
Balance
at the start
of the year
(Number)
Received during
the year as
compensation
(Number)
Net other changes
during the year
(Number)
Balance
at the end
of the year
(Number)
2017
Name
Directors
Mr A Giles
Mr A Barlow
Mr I Lowe
Mr B Dixon
Mr G Dixon (i)
Mr Q George
Ms S Morgan
Other key management personnel
Mr B Maher
Mr T Peacock
19,633,409
57,803,769
14,461,929
35,369,513
86,252,015
-
-
561,526
4,075,975
-
-
-
250,000
-
-
-
416,667
333,334
436,298
(7,753,769)
(3,109,090)
1,484,147
20,069,707
50,050,000
11,352,839
37,103,660
3,593,834
89,845,849
-
-
170,000
170,000
(978,193)
-
-
4,409,309
Totals
218,158,136
1,000,001
(6,156,773)
213,001,364
(i)
to 01 December 2016
Section 7: Other transactions with Key Management Personnel
Transactions with Directors and their personally related entities:
During the year there were no transactions with Directors and their personally related entities. (2016 included revenue to
the value of $353 from a Publisher related to Mr Ben Dixon and Mr Geoff Dixon on normal commercial terms and
conditions).
This marks the end of the audited remuneration report.
This report is made in accordance with a resolution of directors.
Andrew Barlow
Chairman
Adslot Ltd
28 August 2017
24
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Auditor’s Independence Declaration
The Rialto, Level 30
525 Collins St
Melbourne Victoria 3000
Correspondence to:
GPO Box 4736
Melbourne Victoria 3001
T +61 3 8320 2222
F +61 3 8320 2200
E info.vic@au.gt.com
W www.grantthornton.com.au
AUDITOR’S INDEPENDENCE DECLARATION
TO THE DIRECTORS OF ADSLOT LIMITED
In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit of Adslot
Limited for the year ended 30 June 2017, I declare that, to the best of my knowledge and belief, there have been:
a
b
no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the audit.
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
Michael Climpson
Partner
Melbourne, 28 August 2017
25
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Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the year ended 30 June 2017
Total revenue from continuing operations
Other income
Total revenue and other income
Hosting & other related technology costs
Employee benefits expense
Directors’ fees
Recruitment fees
Advertising expense
Lease – rental premises
Impairment of receivables
Listing & registrar fees
Legal fees
Travel expenses
Consultancy fees
Audit and accountancy fees
Other expenses
Share based payment expense
Depreciation and amortisation expenses
Total expenses
Loss before income tax expense
Income tax benefit / (expense)
Loss after income tax expense
Net loss attributable to members
Other comprehensive income / (loss)
Items that may be reclassified subsequently to profit or loss
Foreign exchange translation
Total other comprehensive income / (loss)
Notes
3
3
4
4
4
5
2017
$
8,183,376
823,640
9,007,016
(686,624)
(8,139,988)
(270,833)
(238,350)
(160,424)
(1,074,702)
(17,747)
(119,299)
(49,507)
(488,180)
(212,775)
(196,936)
(936,303)
(330,467)
2016
$
7,735,278
778,504
8,513,782
(1,402,979)
(6,908,429)
(298,656)
(259,606)
(104,830)
(941,552)
(28,240)
(111,237)
(27,728)
(315,124)
(76,236)
(159,889)
(624,527)
(440,138)
(4,685,082)
(4,930,957)
(17,607,217)
(16,630,128)
(8,600,201)
(8,116,346)
(29,986)
(8,630,187)
(8,630,187)
(22,139)
(8,138,485)
(8,138,485)
3,194
3,194
(10,739)
(10,739)
Total comprehensive loss attributable to the members
(8,626,993)
(8,149,224)
Earnings per share (EPS) from loss from continuing operations
attributable to the ordinary equity holders of the company
Basic earnings per share
Diluted earnings per share
16
16
2017
Cents
(0.70)
(0.70)
2016
Cents
(0.77)
(0.77)
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the
accompanying notes.
26
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Consolidated Statement of Financial Position
As at 30 June 2017
Current assets
Cash and cash equivalents
Trade and other receivables
Total current assets
Non-current assets
Property, plant & equipment
Deferred tax assets
Intangible assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Other liabilities
Provisions
Total current liabilities
Non-current liabilities
Provisions
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
Notes
2017
$
2016
$
7
8
9
5
10
11
12
13
13
5
14
15
14,320,147
4,685,621
4,745,969
4,355,987
19,005,768
9,101,956
243,744
36,370
24,747,821
25,027,935
65,518
39,677
26,759,567
26,864,762
44,033,703
35,966,718
2,252,581
2,976,527
583,759
605,590
3,441,930
325,473
36,370
361,843
557,878
457,522
3,991,927
315,587
39,677
355,264
3,803,773
4,347,191
40,229,930
31,619,527
137,949,047
120,693,650
389,929
404,736
(98,109,046)
(89,478,859)
40,229,930
31,619,527
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
27
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Consolidated Statement of Changes in Equity
For the year ended 30 June 2017
2017
Balance at 1 July 2016
Notes
Issued
Capital
$
120,693,650
Reserves
$
404,736
Accumulated
Losses
$
(89,478,859)
Total
Equity
$
31,619,527
Movement in foreign exchange translation reserve
15
Other comprehensive income
Loss attributable to members of the company
Total comprehensive income
Transactions with equity holders in their
capacity as equity holders
Contributions of equity, net of transaction costs
Reclassification of vested performance rights
Net movement in treasury shares
Increase in employees share based payments
reserve
-
-
-
-
3,194
3,194
-
3,194
-
-
3,194
3,194
(8,630,187)
(8,630,187)
(8,630,187)
(8,626,993)
14
14
15
16,910,710
-
344,479
(348,260)
208
-
17,255,397
(208)
330,467
(18,001)
-
-
-
-
-
16,910,710
(3,781)
-
330,467
17,237,396
Balance 30 June 2017
137,949,047
389,929
(98,109,046)
40,229,930
2016
Balance at 1 July 2015
115,100,833
1,187,988
(81,340,374)
34,948,447
Issued
Capital
$
Reserves
$
Accumulated
Losses
$
Total
Equity
$
Notes
Movement in foreign exchange translation reserve
15
Other comprehensive income
Loss attributable to members of the company
Total comprehensive income
Transactions with equity holders in their
capacity as equity holders
Contributions of equity, net of transaction costs
Reclassification of vested ESOP
Increase in employees share based payments
reserve
-
-
-
-
(10,739)
(10,739)
-
-
(10,739)
(10,739)
-
(8,138,485)
(8,138,485)
(10,739)
(8,138,485)
(8,149,224)
14
14
15
4,382,380
1,210,437
-
5,592,817
-
(1,212,651)
440,138
(772,513)
-
-
-
-
4,382,380
(2,214)
440,138
4,820,304
Balance 30 June 2016
120,693,650
404,736
(89,478,859)
31,619,527
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
28
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Consolidated Statement of Cash Flow
As at 30 June 2017
Notes
2017
$
2016
$
Cash flows from operating activities
Receipts from trade and other debtors
Interest received
Receipt of R&D tax incentive and other Grants
11,028,575
11,327,511
326,488
775,241
76,463
511,425
Payments to trade creditors, other creditors and employees
(16,251,884)
(14,685,066)
Income tax received/ (paid)
Interest paid
-
(594)
17,187
(187)
Net cash outflows from operating activities
22
(4,122,174)
(2,752,667)
Cash flows from investing activities
Payments for property, plant and equipment
Proceeds from sale of fixed assets
Receipt of R&D tax incentive relating to capitalised assets
Payments for intangible assets
(177,950)
2,750
1,583,175
(4,524,194)
(58,140)
-
1,716,792
(2,911,523)
Net cash outflows from investing activities
(3,116,219)
(1,252,871)
Cash inflows from financing activities
Proceeds from issue of shares
Payments of equity raising costs
Net cash inflows from financing activities
Net increase / (decrease) in cash held
Cash at the beginning of the financial year
Effects of exchange rate changes on cash
18,054,640
4,600,000
(1,219,342)
(237,135)
16,835,298
4,362,865
9,596,905
4,745,969
(22,727)
357,327
4,441,226
(52,584)
Cash at the end of the financial year
7
14,320,147
4,745,969
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
29
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Notes to the Financial Statement
For the year ended 30 June 2017
Summary of Significant Accounting Policies
The financial report covers Adslot Ltd (‘the Company’) and controlled entities (‘the Group’). Adslot Ltd is a listed public
company, incorporated and domiciled in Australia. The financial report is for the financial year ended 30 June 2017 and is
presented in Australian dollars.
The principal accounting policies adopted in the preparation of these consolidated financial statements are summarised
below. These policies have been consistently applied to all the years presented, unless otherwise stated.
Basis of preparation
This general purpose financial report has been prepared in accordance with Australian Accounting Standards, other
authoritative pronouncements of the Australian Accounting Standards Board (AASB) and the Corporations Act 2001.
Compliance with IFRS
Australian Accounting Standards include International Financial Reporting Standards as adopted in Australia. Compliance
with Australian Accounting Standards ensures that the financial statements and notes of Adslot Ltd comply with
International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).
Adslot Ltd is a for-profit entity for the purpose of preparing the financial statements.
Historical cost convention
These financial statements have been prepared under the historical cost convention as modified by the revaluation of
available-for-sale financial assets. Under the historical cost convention assets are recorded at the amount of cash or cash
equivalents paid or the fair value of the consideration given to acquire them at the time of their acquisition. Liabilities are
recorded at the amount of proceeds received in exchange for the obligation, or in some circumstances at the amounts of
cash or cash equivalents expected to be paid to satisfy the liability in the normal course of business.
Critical accounting estimates
The preparation of financial statements in conformity with Australian Accounting Standards requires the use of certain
critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s
accounting policies. The estimates and associated assumptions are based on historical experience and other factors that
are considered relevant. Actual results may differ from these estimates. The estimates and associated assumptions are
reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is
revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both
current and future periods.
Going concern
Management continue to invest resources to successfully launch the Adslot products in multiple geographies. The Group
has incurred net cash outflows from operations of $4.1m for the year, and management anticipate incurring further net
cash outflows from operations until such time as sufficient revenue growth is achieved. With cash at bank of $14.3m at
year-end, the Directors believe there exists a reasonable expectation that the Group can continue to pay its debts as and
when they fall due, and the financial report has been prepared on a going concern basis.
Principles of consolidation
Subsidiaries
The consolidated financial statements comprise those of the Company, and the entities it controlled at the end of, or during,
the financial year. The Company controls a subsidiary if it is exposed, or has rights, to variable returns from its involvement
with the subsidiary and has the ability to affect those returns through its power over the subsidiary.
All intra-group transactions, balances, income and expenses between entities in the Group included in the financial
statements have been eliminated in full. Where unrealised losses on intra-group asset sales are reversed on consolidation,
the underlying asset is also tested for impairment from a group perspective. Where an entity either began or ceased to be
controlled during the year, the results are included only from the date control commenced or up to the date control ceased.
The accounting policies adopted in preparing the financial statements have been consistently applied by entities in the
Group.
Investments in subsidiaries are accounted for at cost less impairment losses in the parent entity information in Note 24.
30
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Business combinations
Acquisition of subsidiaries and businesses are accounted for using the acquisition method. The consideration for each
acquisition is measured at the aggregate of the fair values (at the date of exchange) of assets given, liabilities incurred or
assumed and equity instruments issued by the Group in exchange for control of the acquiree. Acquisition related costs are
recognised in profit or loss as incurred.
The Group recognises identifiable assets and liabilities assumed in the business combination regardless of whether they
have been previously recognised in the acquiree’s financial statements prior to acquisition. Assets acquired and liabilities
assumed are generally measured at their acquisition date fair values. Goodwill is stated after separate recognition of
identifiable intangible assets calculated as the excess of the sum of the fair value of the consideration transferred over the
acquisition date fair value of identifiable net assets. If the identifiable net assets exceed the consideration transferred, the
excess amount is recognised in profit or loss immediately.
Any deferred settlement of cash consideration is discounted to its present value as at the date of acquisition. The discount
rate used is the incremental borrowing rate that the Group can obtain from an independent financier under comparable
terms and conditions.
Foreign Currency Exchange
In preparing the financial statements of the individual entities, transactions in currencies other than the entity’s functional
currency are recorded at the rates of exchange prevailing on the dates of the transactions. At each reporting date, monetary
items denominated in foreign currencies are retranslated at the rates prevailing at the reporting date. Exchange differences
are recognised in the Consolidated Statement of Profit or Loss and Other Comprehensive Income in the period in which
they arise.
On consolidation, the assets and liabilities of the Group’s foreign operations are translated into Australian dollars at
exchange rates prevailing on the reporting date. Income and expense items are translated at the average exchange rates
for the period. Exchange differences arising, if any, are charged/credited to other comprehensive income and recognised
in the Group’s foreign currency translation reserve in equity. On disposal of a foreign operation the cumulative translation
difference recognised in equity are reclassified to profit or loss and recognised as part of the gain or loss on disposal.
Cash and cash equivalents
For the purposes of the Statement of Cash Flows, cash includes cash on hand and deposits at call which are readily
convertible to cash and are not subject to significant risk of changes in value, net of bank overdrafts.
Publisher Account Cash represents share of advertising revenue held before release to Adslot Publishers.
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and any impairment in value. The carrying
values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate
the carrying value may not be recoverable. Leasehold improvements are depreciated using the straight-line method over
the remaining period of the underlying lease.
Depreciation is calculated on a straight line basis for all plant and equipment. The estimated useful lives, residual values
and depreciation method are reviewed at the end of each annual reporting period, with the effect of any changes recognised
on a prospective basis.
The gain or loss arising on disposal or retirement of an item of property, plant and equipment is determined as the difference
between the sales proceeds and the carrying amount of asset and is recognised in profit or loss. The following depreciation
rates are used for each class of depreciable asset:
Computer Equipment
Plant & Equipment
Leasehold Improvements
33 – 40% per annum
20 – 33% per annum
20 – 100% per annum
Receivables
Trade receivables are recognised initially at fair value and thereafter are measured at amortised cost, less provision for
impairment. They are non-derivative financial assets with fixed or determinable amounts not quoted in an active market.
Trade accounts receivable are generally settled between 14 and 60 days and carried at amounts recoverable.
Collectability of trade receivables is reviewed on an ongoing basis. Debts that are known to be uncollectible are written
off. A provision for doubtful receivables is established when there is objective evidence that the Group will not be able to
collect all amounts due according to the original terms of the receivables. The amount of the provision is the difference
between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the effective
interest rate. The amount of the provision is recognised in profit or loss. Subsequent recoveries of amounts previously
written off are credited against the allowance account.
31
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Notes to the Financial Statements (Continued)
1. Summary of Significant Accounting Policies (Continued)
Investments and other financial assets
Financial assets are recognised when the group entity becomes a party to the contractual provisions of the instrument.
At initial recognition, the group measures a financial asset at its fair value plus, in the case of a financial asset not at fair
value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset.
Transaction costs of financial assets carried at fair value through profit or loss are expensed through profit or loss.
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an
active market. Loans and receivables are measured subsequent to recognition at amortised cost using the effective interest
method, less provision for impairment. Discounting is omitted where the effect of discounting is immaterial.
Available-for-sale financial assets are non-derivative financial assets that are either designated to this category or do not
qualify for inclusion in any other category of financial assets. Available-for-sale financial assets are measured at fair value.
Gains or losses arising from changes in available-for-sale financial assets are presented in other comprehensive income
in the period in which they arise.
Trade and other creditors – financial liabilities
Trade accounts payable and other creditors represent liabilities for goods and services provided to the Group prior to the
end of the financial year and which are unpaid. The amounts are unsecured and are usually paid within 45 days of
recognition.
Financial liabilities are measured subsequently at amortised cost using the effective interest method.
Borrowings
Borrowings are initially recognised at fair value (less transaction costs) and subsequently measured at amortised cost.
Any difference between the proceeds and the redemption amount is recognised in profit or loss over the period of the
borrowing using the effective interest method.
Finance costs
Finance costs are recognised as expenses in the period in which they are incurred except where they are incurred in the
construction of a qualifying asset in which case the finance costs are capitalised as part of the asset.
Income tax
The income tax expense or revenue for the period is the tax payable on the current period’s taxable income based on the
national income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to
temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements,
and to unused tax losses.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the
assets are recovered or liabilities are settled, based on those tax rates which are enacted or substantively enacted for each
jurisdiction. The relevant tax rates are applied to the cumulative amounts of deductible and taxable temporary differences
to measure the deferred tax asset or liability. An exception is made for certain temporary differences arising from the initial
recognition of an asset or a liability. No deferred tax asset or liability is recognised in relation to these temporary differences
if they arose in a transaction, other than a business combination, that at the time of the transaction did not affect either
accounting profit or taxable profit or loss.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that
future taxable amounts will be available to utilise those temporary differences and losses. Deferred tax liabilities are always
provided for in full.
Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases
of investments in controlled entities where the parent entity is able to control the timing of the reversal of the temporary
differences and it is probable that the differences will not reverse in the foreseeable future.
Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in
equity.
32
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Tax consolidation legislation
Adslot Ltd and its wholly-owned Australian controlled entities have implemented the tax consolidation legislation. The head
entity, Adslot Ltd, and the controlled entities in the tax consolidated group account for their own current and deferred tax
amounts. These tax amounts are measured as if each entity in the tax consolidated group continues to be a stand-alone
taxpayer in its own right.
To the extent that it is not probable that taxable profit will be available in the foreseeable future against which the unused
tax losses or unused tax credits can be utilised, the deferred tax assets of its own and its controlled entities are not
recognised by Adslot Ltd.
Employee benefits
Wages and salaries, annual leave and sick leave
Short-term employee benefits are current liabilities included in employee benefits, measured at the undiscounted amount
that the Group expects to pay as a result of the unused entitlement. Annual leave is included in ‘provisions’. The Group
does not discount the leave liability calculations as the Group expects all annual leave for all employees to be used wholly
within 12 months of the end of reporting period.
Long service leave
The liability for long service leave expected to be settled within 12 months of the reporting date is recognised in provisions
for employee entitlements and is measured at the amount expected to be paid when the liabilities are settled. The liability
for long service leave expected to be settled more than 12 months from the reporting date, is recognised in the non-current
provision for employee benefits and is measured as the present value of the estimated future cash outflows to be made by
the Group in respect of services provided by employees up to reporting date.
Share-based compensation benefits
Equity-settled share-based payments with employees and others providing similar services are measured at the fair value
of the equity instrument at the grant date. The fair value at grant date is determined using a binomial option pricing model
that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date, the
expected price volatility of the underlying share, the expected dividend yield and the risk-free interest rate for the term of
the option.
The fair value determined at the grant date of the equity-settled share-based payments is recognised as an expense, with
a corresponding increase in equity (share-based payments reserve) on a straight line basis over the vesting period.
Upon the exercise of options, the balance of the share-based payments reserve relating to those options is transferred to
share capital while the proceeds received, net of any directly attributable transaction costs, and are credited to share
capital.
Intangible Assets
Goodwill
Goodwill arising in a business combination is recognised as an asset at the date that control is acquired (acquisition date).
Goodwill is measured as the excess of the fair value of consideration paid over the fair value of the identifiable net assets
of the entity or operations acquired. Goodwill acquired in business combinations is not amortised. Instead, goodwill is
tested for impairment annually, being allocated to the cash flows of the relevant cash generating unit and is carried at cost
less accumulated impairment losses. An impairment loss for goodwill is recognised immediately in profit or loss and is not
reversed in a subsequent period.
Research and development expenditure
Research costs are expensed as incurred. An intangible asset arising from development expenditure on an internal project
is recognised only when the Group can demonstrate the technical feasibility of completing the intangible asset so that it
will be available for use or sale, its intention to complete and its ability to use or sell the asset, how the asset will generate
future economic benefits, the availability of resources to complete the development and the ability to measure reliably the
expenditure attributable to the intangible asset during its development. Following the initial recognition of the development
expenditure, the cost model is applied requiring the assets to be carried at cost less any accumulated amortisation and
accumulated impairment losses. Any expenditure so capitalised is amortised over the period of expected benefits from the
related project.
The carrying value of an intangible asset arising from development costs is tested for impairment annually when the asset
is not yet available for use or more frequently when an indicator of impairment arises during the reporting period.
33
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Notes to the Financial Statements (Continued)
1. Summary of Significant Accounting Policies (Continued)
Intellectual property
The intellectual property relates to the platform technology, branding and domains acquired as a result of the acquisition
of Adslot, QDC IP Technology and Facilitate Digital businesses. Where the useful life is assessed as indefinite, assets are
not amortised and the carrying value is tested for impairment annually or more frequently if events or changes in
circumstances indicate impairment. It is carried at cost less impairment losses. For those assets assessed as having a
finite life, they are amortised on a straight-line basis over the estimated useful life of the asset. The expected accounting
useful life of intellectual property relating to the Adslot, QDC IP Technology and Facilitate Digital business is 4 to 5 years.
Domain name
Acquired domain names are accounted for at cost, useful life is assessed as indefinite and the assets are not amortised.
The carrying value is tested for impairment annually or more frequently if events or changes in circumstances indicate
impairment. They are carried at cost less impairment losses.
Software
Software represents internally developed software platforms capitalised according to accounting standards. Software is
assessed as having a finite life and is amortised on a straight-line basis over the estimated useful life of the asset. The
expected accounting useful life of software is 5 years.
The carrying value of the software is tested for impairment when an indicator of impairment arises during the reporting
period.
Leased assets
Leases of assets under which the Group assumes substantially all the risks and benefits of ownership are classified as
finance leases. This is distinct from operating leases under which the lessor effectively retains substantially all such risks
and benefits. Property, plant and equipment acquired by finance leases are capitalised at the present value of the minimum
lease payments as a finance lease asset and as a corresponding lease liability from date of inception of the lease. Lease
assets are amortised over the period the entity is expected to benefit from the use of the assets or the term of the lease,
whichever is shorter. Finance lease liabilities are reduced by the component of principal repaid. Lease payments are
allocated between the principal component of the liability and interest expense.
Operating lease payments are charged to statement of profit or loss and other comprehensive income on a straight-line
basis over the period of the lease term. Associated costs such as maintenance and insurance are expensed as incurred.
Goods and services tax
Revenue, expenses and assets are recognised net of the amount of goods and services tax (GST), except:
i. Where the amount of GST incurred is not recoverable from the taxation authority, it is recognised as part of the cost
of acquisition of an asset or as part of an item of expense; or
ii.
For receivables and payables which are recognised inclusive of GST.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables.
34
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Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net
of returns, allowances, duties and taxes paid.
Revenue is recognised for the major business activities as follows:
Rendering of services
Service revenue is recognised on an accruals basis as and when the service has been passed onto the customer.
Website development revenue is recorded based on project delivery. All projects are assigned percentages of project
completion (based on actual work in progress) and all website development revenue applicable to percentage of incomplete
work is recorded as unearned revenue.
Website hosting, SSL certificate and domain name registration revenue is recorded over a one year duration. While 30%
of search engine optimisation renewal revenue is recorded as earned in first month of renewal contract, the remaining 70%
revenue is recognised over a one year duration. Prepaid revenue calculated in this regard is excluded from revenue and
is being treated as unearned revenue in the Consolidated Statement of Financial Position.
Adslot Publisher revenue is accounted for in accordance with AASB 118 Revenue such that only the portion of the media
campaign that is retained by Adslot for their services is recorded as revenue. Where underlying campaigns selected by
advertisers are served over a period a time, the portion that extends beyond the reporting period is not taken up as revenue.
Where the funds for these campaigns are prepaid by advertisers those amounts are treated as unearned revenue in the
Consolidated Statement of Financial Position.
Funds collected from advertisers and due to publisher clients are separated from company funds and are disclosed in the
accounts as “Cash held on behalf of Publishers”. “Publisher Creditors” represents “Cash held on behalf of Publishers” and
amounts due from advertisers that needs to be repaid to the publishers.
Interest revenue
Interest revenue is recognised when it is probable that the economic benefits will flow to the Group and the amount can
be measured reliably, taking into account the effective yield on the financial asset.
Government grants
In accordance with AASB 120, government grants are recognised at fair value where there is reasonable assurance that
the grant will be received and all grant conditions will be met. Where appropriate grants relating to expense items are
recognised as either other income or deducted in reporting the related expense, over the periods necessary to match the
grant to the costs they are compensating. Grants relating to assets are credited to deferred income and are amortised on
a straight line basis over the expected lives of the assets.
Sale of non-current assets
The net gain from the sale of non-current asset sales is recognised as income at the date control of the asset passes to
the buyer, usually when the signed contract of sale becomes unconditional.
Leasehold improvements
The cost of improvements to leasehold properties is amortised over the unexpired period of the lease or the estimated
useful life of the improvement to the Group, whichever is the shorter.
Earnings per share
Basic earnings per share
Basic earnings per share for continuing operations and total operations attributable to members of the Company are
determined by dividing net profit after income tax from continuing operations and the net profit attributable to members of
the Company respectively, excluding any costs of servicing equity other than ordinary shares, by the weighted average
number of ordinary shares outstanding during the financial period. The number of shares used in the calculation at any
time during the period is based on the physical number of shares issued.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account
the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the
weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential
ordinary shares.
Dividends
Provision is made for the amount of any dividend determined or recommended by the directors on or before the end of the
financial year but not distributed at reporting date.
35
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Notes to the Financial Statements (Continued)
1. Summary of Significant Accounting Policies (Continued)
Impairment of assets
Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually
for impairment or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets
are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be
recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its
recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For
the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable
cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating
units). Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the
impairment at each reporting date.
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision
maker. The chief operating decision maker has been identified as the Chief Executive Officer.
Each of the operating segments is managed separately as each of these service lines requires different technologies,
service different clients and sells different products. All inter-segment transactions are carried out at arm’s length prices.
The Group reports its segments based on geographical locations:
APAC – Australia, New Zealand and Asia;
EMEA – Europe, the Middle East and Africa; and
The Americas – North, Central and South America.
Critical accounting judgements and key sources of estimation uncertainty
Critical judgements in applying the entity’s accounting policies
The following are the critical judgements (apart from those involving estimations, which are dealt with below), that
management has made in the process of applying the Group’s accounting policies and that have the most significant effect
on the amounts recognised in the financial statements:
Revenue recognition
In web development and web hosting business operations, management assesses stage of completion of each project
and recognises revenue in the period in which development work is undertaken. In making its judgement, management
considered the standard duration of such contracts, stage of progress in contracts and commencement date of such
contracts. Accordingly, management has deferred recognising some web development and web hosting revenue of an
estimated value of services to be rendered in the future.
Key sources of estimation uncertainty
The following are the key assumptions concerning the future and other key estimation uncertainty at the reporting date,
that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next
financial year.
Impairment of goodwill and intangible assets
Determining whether goodwill and intangible assets are impaired requires an estimation of the fair value less costs to sell
of the cash-generating units to which goodwill and intangible assets have been allocated. Under the income based
approach for fair value less costs to sell calculations the entity is required to estimate the future cash flows expected to
arise from the cash-generating units and a suitable discount rate in order to calculate the present value. The future cash
flows included in the assessments are predicated largely on:
the conversion of Symphony customers in to trading on Adslot platform;
the continued adoption of the Adslot Marketplace product; and
the growth of Symphony.
In the event that these products do not generate revenues as planned an impairment of the related intangible assets may
result.
The carrying amount of goodwill and intangible assets at the reporting date was $24,747,821 (2016: $26,759,567) and
there were no impairment losses (2016: nil) recognised during the current financial year. Refer to Note 10 for further
details.
36
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Capitalisation of internally developed software
Distinguishing the research and development phases of software projects and determining whether the recognition
requirements for the capitalisation of development costs are met, requires judgement. After capitalisation, management
monitors whether the recognition requirements continue to be met and whether there are any indicators that capitalised
costs may be impaired.
The capitalisation of internally developed software amount for the year was $2,605,280 (2016: $1,336,540)
Share based payments
The calculation of the fair value of options issued requires significant estimates to be made in regards to several variables
such as volatility and the probability of options reaching their vesting period. The estimations made are subject to variability
that may alter the overall fair value determined. The share based payment expense for the year was $330,467 (2016:
$440,138).
Unrecognised deferred tax assets
As disclosed in Note 5, the Group recognises deferred tax assets relating to temporary differences, capital losses or
operating losses when it is probable that they will be able to be utilised in future reporting periods. Due to the continuing
operating losses, the Directors have determined it is not appropriate to recognise deferred tax assets until a point in time
where it is probable that future taxable income is going to be available to utilise the assets. The tax benefit of deferred tax
assets not recognised is $9,562,457 (2016: $9,703,919).
Research and development tax concessions
A receivable of $2,706,250 (2016: $2,317,658) has been recognised in relation to a research and development tax
concession for the 2017 financial year. The actual claim is yet to be submitted with the Australian Tax Office and therefore
there remains some uncertainty in regards to the quantum of the concession to be received. The financial statements
reflect the Directors’ estimate of the receivable after taking into account the likelihood of each component of the claim
being received.
New standards and interpretations issued but not effective
The following new or amendments to existing standards have been published and are mandatory for accounting periods
beginning on or after 1 July 2018 or later periods, but have not yet been adopted by the Company.
AASB 9 Financial Instruments was issued and introduces changes in the classification and measurement of financial assets
and financial liabilities, impairment of financial assets and new rules for hedge accounting. This standard becomes
mandatory for the year ending 30 June 2019. The group has not yet completed its assessment of this new standard
however based on the financial instruments held at balance date, this standard is not expected to have a material impact
on the financial statements upon adoption.
AASB 15 Revenue from Contracts with Customers establishes a comprehensive framework for determining whether, how
much and when revenue is recognised. This standard becomes mandatory for the year ending 30 June 2019. The potential
effects on adoption of the standard are currently being assessed. From initial evaluation of the current contracts in place,
the adoption of this standard is not expected to have a material impact on the on the financial statements. However the
group has not yet completed its assessment of this standard.
AASB 16 Leases was issued and introduced changes to lessee accounting. It requires recognition of lease liabilities and
assets other than short-term leases or leases of low-value assets on statement of financial position. This will replace the
operating / finance lease distinction and accounting requirements prescribed in AASB 117 Leases. This standard becomes
mandatory for the year ending 30 June 2020. The group has performed a preliminary evaluation of the implications of
ASSB 16 and expects significant impact on the presentation and disclosure of some of the components within the financial
statements, in particular the Financial Position. However, the group has not yet completed its assessment of this standard.
AASB 9, AASB 15 and AASB 16 are available for early adoption but have not been applied in this financial report.
37
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Notes to the Financial Statements (Continued)
Segment Information
2017
Operating segments
APAC
EMEA
The
Americas
Total
Revenue for services rendered (i)
Segment result from continuing operations
Depreciation included in segment result (Note 9)
Amortisation included in segment result (Note 10)
Additions to non-current assets (PP&E) (Note 9)
7,311,160
(4,575,728)
62,665
4,617,026
232,293
217,631
(1,487,849)
997
-
1,372
330,449
(1,600,122)
4,394
-
12,810
7,859,240
(7,663,699)
68,056
4,617,026
246,475
Statement of Financial Position
Segment assets
Segment liabilities
2016
Operating segments
36,201,990
(15,257,765)
232,452
(103,487)
525,257
(146,682)
36,959,699
(15,507,934)
APAC
EMEA
The
Americas
Total
Revenue for services rendered (i)
Segment result from continuing operations
Depreciation included in segment result (Note 9)
Amortisation included in segment result (Note 10)
Additions to non-current assets (PP&E) (Note 9)
6,489,675
(4,972,044)
59,441
4,866,072
51,853
640,802
(279,866)
1,817
-
1,766
498,869
(1,017,005)
3,627
-
4,906
7,629,346
(6,268,915)
64,885
4,866,072
58,525
Statement of Financial Position
Segment assets
Segment liabilities
37,616,620
(16,037,783)
512,104
(103,966)
391,113
(49,610)
38,519,837
(16,191,359)
Segment revenue reconciles to total revenue from continuing operations as follows:
Revenue
Total segment revenue
Head office revenue
Interest revenue
Total revenue from continuing operations
(i) Refer to Note 3 for a description of Revenue.
2017
$
2016
$
$7,859,240
7,629,346
-
$324,136
30,600
75,332
$8,183,376
7,735,278
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A reconciliation from segment result to operating profit before income tax is provided as follows:
Segment Result
Total segment result
Interest revenue
Other revenue
Share option expenses
Gain / (Loss) on foreign exchange
Income tax benefit/(expense)
Profit/ (Loss) on sale/write off of asset
Other head office income/(expenses) not allocated in segment result
2017
$
2016
$
(7,663,699)
(6,268,915)
324,136
823,640
(330,467)
(13,090)
(11,842)
2,549
(1,761,414)
75,332
778,504
(440,138)
35,486
(22,139)
(1,624)
(2,294,991)
Loss before income tax from continuing operations
(8,630,187)
(8,138,485)
Reportable segment assets are reconciled to total assets as follows:
Segment assets
Total segment assets
Head office assets
Intersegment eliminations
2017
$
38,519,837
47,795,613
(50,348,732)
2016
$
41,630,006
49,019,570
(51,374,876)
Total assets as per the statement of financial position
35,966,718
39,274,700
Reportable segment liabilities are reconciled to total liabilities as follows:
Segment assets
Total segment assets
Head office assets
Intersegment eliminations
2017
$
36,959,699
57,425,836
(50,351,832)
2016
$
38,519,837
47,795,613
(50,348,732)
Total assets as per the statement of financial position
44,033,703
35,966,718
The Company’s Total Revenue and Other Income (Note 3) and its non-current assets (other than financial instruments)
are divided into the following geographical areas:
Australia (Domicile)
New Zealand
USA
Other countries
Total
2017
$
2016
$
Revenue
Non-Current Assets
Revenue
Non-Current Assets
$7,184,931
$496,203
$330,449
$995,433
$9,007,016
$25,010,590
$1,411
$12,975
$6,266
$25,031,242
6,034,933
576,596
498,869
1,403,384
8,513,782
26,810,189
2,346
4,739
47,488
26,864,762
Revenues from external customers in the Group’s domicile, Australia, as well as its major markets, New Zealand and the
USA, have been identified on the basis of the customer’s geographical location. Non-current assets are allocated based
on their physical location.
39
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Notes to the Financial Statements (Continued)
2. Segment Information (Continued)
Notes to and forming part of the segment information
Business segments
The Group reports its segments based on geographical locations:
APAC – Australia, New Zealand and Asia;
EMEA – Europe, the Middle East and Africa; and
The Americas – North, Central and South America.
Accounting policies
The accounting policies of the reportable segments are the same as the Group’s accounting policies described in Note 0.
Segment revenues, expenses, assets and liabilities are those that are directly attributable to a segment and the relevant
portion that can be allocated to the segment on a reasonable basis. Segment profit represents the profit earned by each
segment without investment revenue, finance costs and income tax expense. This is the measure reported to the chief
operating decision maker for the purposes of resource allocation and assessment of segment performance.
Segment assets include all assets used by a segment and consist primarily of operating cash, receivables, capitalised
R&D and other intangible assets, net of related provisions but do not include non-current inter-entity assets and liabilities
which are considered quasi-equity in substance.
Segment liabilities consist primarily of trade and other creditors, employee benefits and sundry provisions and accruals.
Segment assets and liabilities do not include income taxes.
Inter-segment transfers
Segment revenue reported above represents revenue generated from external customers. There were no Inter segment
revenue transfers or expenses to be eliminated on consolidation (2016: nil).
Major customers
The Group provides services to and derives revenue from a number of customers across all the divisions. The Group had
certain customers whose revenue individually represented 10% or more of the Company’s total revenue.
For the year to 30 June 2017, one customer accounted for 10% of revenue (2016: one).
40
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Revenue and Other Income
Revenue
Revenue from Trading Technology
Revenue from Services
Revenue from Adserving
Total revenue for services rendered
Interest income
Total revenue from continuing operations
Other income
Grant income
Total revenue and other income
2017
$
2016
$
5,379,387
1,871,159
608,694
7,859,240
324,136
8,183,376
4,227,677
2,532,188
900,081
7,659,946
75,332
7,735,278
823,640
823,640
778,504
778,504
9,007,016
8,513,782
Revenue derived from the three product lines are described as follows:
Trading Technology
Comprises Adslot, a leading global media trading technology, and Symphony, market-leading workflow automation
technology, purpose built for digital media agencies.
Services
Comprising marketing services that are provided by the company’s Webfirm division to SME clients and project-based
customisation of Trading Technology.
Adserving
Technology that enables advertisers to deliver and measure the performance of online display advertising (including
impressions, clicks and online sales).
41
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Notes to the Financial Statements (Continued)
Expenses
Loss before income tax includes the following specific
expenses:
Depreciation and amortisation
Amortisation – Leasehold improvements
Amortisation – Software development costs
Depreciation – Plant & equipment
Total depreciation and amortisation
Other charges against assets
Impairment of trade receivables
Capitalised development wages (net of related grants)
Development wages expensed in the period
Total Development wages
Rental expense – operating leases
Defined contribution superannuation expense
Foreign currency (gain) / loss
2017
$
2016
$
5,848
4,617,026
62,208
4,685,082
17,152
4,866,072
47,733
4,930,957
17,747
28,240
2,605,280
1,921,942
4,527,222
1,074,702
780,067
13,090
1,336,540
2,181,628
3,518,168
941,552
622,406
(35,486)
42
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Income Tax Expense
2017
$
2016
$
a)
Numerical reconciliation of income tax expense to prima facie
tax benefit
Loss before income tax
(8,600,201)
(8,116,346)
Prima facie tax benefit on loss before income tax at 27.5% (2016: 30%)
(2,365,055)
(2,434,904)
Tax effect of:
Other non-allowable items
Share based expensed during year
Research and development tax concession
Income tax benefit attributable to entity
Deferred tax income relating to utilisation of unused tax losses
Deferred tax assets relating to tax losses not recognised
Other – adjustments and net foreign exchange differences
Income tax (benefit)/expense attributable to entity
b) Movement in deferred tax balances
Balance at
1 July
2016
$
Recognised
in Profit &
Loss
$
Acquired in
Business
combination
$
Trade and other receivables
(125,957)
Property, plant and equipment
Intangible assets
Unused tax losses
199
165,435
(39,677)
10,496
(17)
(13,786)
3,307
Net tax (assets) / liabilities
-
-
-
-
-
-
-
Balance at
1 July
2015
$
Recognised
in Profit &
Loss
$
Acquired in
Business
combination
$
Trade and other receivables
(125,957)
Property, plant and equipment
Intangible assets
Unused tax losses
Net tax (assets) / liabilities
199
165,435
(39,677)
-
-
-
-
-
-
-
-
-
-
-
11,789
90,878
1,710,848
(551,540)
-
667,198
(145,644)
29,986
8,154
132,041
1,545,105
(749,604)
-
1,068,079
(296,336)
22,139
Balance at 30 June 2017
Net
Deferred
tax assets
Deferred tax
liabilities
$
(115,461)
182
151,649
$
-
-
-
(36,370)
(36,370)
$
(115,461)
182
151,649
-
-
(36,370)
36,370
Balance at 30 June 2016
Net
Deferred
tax assets
Deferred tax
liabilities
$
(125,957)
199
165,435
(39,677)
$
-
-
-
(39,677)
$
(125,957)
199
165,435
-
-
(39,677)
39,677
43
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Notes to the Financial Statements (Continued)
5.
Income Tax Expense (Continued)
c)
Deferred tax assets not brought to account
Deferred tax assets not brought to account, the benefits of which will only be realised if the conditions for deductibility set
out on Note 0(k) occur.
Temporary differences
Tax Losses:
Operating losses
Capital losses
Potential tax benefit (27.5% 2016: 30%)
2017
$
2016
$
(4,512,568)
(4,240,800)
39,046,882
36,348,938
238,258
238,258
34,772,572
32,346,396
9,562,457
9,703,919
The Company and its wholly-owned Australian resident entities have formed a tax-consolidated group and are therefore
taxed as a single entity. The head entity within the tax-consolidated group is Adslot Ltd.
Dividends
The Company did not declare any dividends in the current year or prior year. There are no franking credits available to
shareholders of the Company.
Cash and Cash Equivalents
Cash at bank and on hand
Publisher account
2017
$
13,681,124
639,023
14,320,147
2016
$
3,493,749
1,252,220
4,745,969
Included in the Cash at Bank is $833,097 (2016:$365,877) of funds held on term deposit as guarantee for our corporate
credit card facilities and for the benefit of landlords under office lease agreements.
44
For personal use only
Trade and Other Receivables
Current:
Trade debtors
Less: Allowance for impairment
Research and Development grant receivable
Other receivables
Prepayments
The average age of the Company’s trade receivables is 49 days (2016: 63 days).
(a) Ageing of past due but not impaired
0 – 30 days
31 – 60 days
61 – 90 days
Over 91 days
(b) Movement in the provision for impairment
Balance at beginning of the year
Impairment recognised during the year
Amounts written off as uncollectible
Amounts recovered during the year
Net foreign exchange differences
Balance at the end of the year
2017
$
1,526,780
(2,814)
1,523,966
2,706,250
176,002
279,403
2016
$
1,915,712
(161,683)
1,754,029
2,317,658
58,232
226,068
4,685,621
4,355,987
2017
$
141,220
70,035
24,600
517
236,372
2017
$
161,683
54,852
(206,031)
(7,690)
-
2,814
2016
$
75,994
29,976
4,032
4,700
114,702
2016
$
241,074
12,369
(92,011)
(1,873)
2,124
161,683
In determining the recoverability of a trade receivable, the Company considers any recent history of payments and the
status of the projects to which the debt relates. No payment terms have been renegotiated. The concentration of credit risk
is limited due to the customer base being large and unrelated. Accordingly, the Directors believe that there is no further
provision required in excess of the allowance for impairment.
Fair value of receivables
Fair value of receivables at year end is measured to be the same as receivables net of the allowance for impairment.
45
For personal use only
Notes to the Financial Statements (Continued)
Non-Current Assets – Property, Plant and Equipment
Leasehold improvements – at cost
Less: Accumulated amortisation
Plant and equipment – at cost
Less: Accumulated depreciation
Computer equipment – at cost
Less: Accumulated depreciation
Total carrying amount of property, plant and equipment
2017
$
133,010
(110,020)
22,990
156,190
(131,481)
24,709
497,285
(301,240)
196,045
243,744
2016
$
104,280
(104,172)
108
152,970
(149,069)
3,901
332,767
(271,258)
61,509
65,518
Reconciliations of the carrying amounts of each class of property, plant and equipment at the beginning and end of the
current financial year are set out below:
2017
Carrying amount at 1 July 2016
Additions
Depreciation / amortisation expense
Net foreign exchange differences
Leasehold
Plant and
Computer
Improvements
Equipment
Equipment
$
108
28,730
(5,848)
-
$
3,901
27,838
(7,030)
-
$
61,509
189,907
(55,178)
(193)
Carrying amount at 30 June 2017
22,990
24,709
196,045
2016
Carrying amount at 1 July 2015
Additions
Disposals/Write Offs
Leasehold
Plant and
Computer
Improvements
Equipment
Equipment
$
17,260
-
-
$
19,618
3,954
-
$
37,418
54,571
(1,624)
Total
$
65,518
246,475
(68,056)
(193)
243,744
Total
$
74,296
58,525
(1,624)
Depreciation / amortisation expense
(17,152)
(19,671)
(28,062)
(64,885)
Net foreign exchange differences
Carrying amount at 30 June 2016
-
108
-
3,901
(794)
(794)
61,509
65,518
46
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Non-Current Assets – Intangible Assets
Year ended 30 June 2017
Opening net book amount
Acquisitions
Amortisation
Carrying amount at 30 June
2017
At 30 June 2017
Cost
Accumulated amortisation and
impairment
Carrying amount at 30 June
2017
Year ended 30 June 2016
Opening net book amount
Acquisitions
Amortisation
Carrying amount at 30 June
2016
At 30 June 2016
Cost
Accumulated amortisation and
impairment
Carrying amount at 30 June
2016
Internally
Developed
Software
$
3,375,131
2,605,280
(1,258,508)
Domain
Name
$
Intellectual
Property
$
Goodwill
$
Total
$
38,267
8,184,230
15,161,939
26,759,567
-
-
-
(3,358,518)
-
-
2,605,280
(4,617,026)
4,721,903
38,267
4,825,712
15,161,939
24,747,821
7,941,028
38,267
29,045,250
15,161,939
52,186,484
(3,219,125)
-
(24,219,538)
-
(27,438,663)
4,721,903
38,267
4,825,712
15,161,939
24,747,821
Internally
Developed
Software
$
2,990,943
1,336,540
(952,352)
Domain
Name
$
Intellectual
Property
$
Goodwill
$
Total
$
38,267
12,097,950
15,161,939
30,289,099
-
-
-
(3,913,720)
-
-
1,336,540
(4,866,072)
3,375,131
38,267
8,184,230
15,161,939
26,759,567
5,335,748
38,267
29,045,250
15,161,939
49,581,204
(1,960,617)
-
(20,861,020)
-
(22,821,637)
3,375,131
38,267
8,184,230
15,161,939
26,759,567
47
For personal use only
Notes to the Financial Statements (Continued)
10. Non-Current Assets – Intangible Assets (Continued)
Internally Developed Software
Internally developed software represents a number of software platforms developed within the Company. The
following table shows the portion of platform development costs that are capitalised and expensed for the
current financial year, 2017:
Platform
Capitalised Wages
R&D grants offsetting
capitalised wages
Net Capitalised
Wages
Adslot Publisher and Marketplace
Symphony
$
1,169,600
3,248,673
$
(508,776)
(1,413,173)
$
660,824
1,835,500
The following table shows the portion of platform development costs that are capitalised and expensed for the prior financial
year, 2016:
Platform
Capitalised Wages
R&D grants offsetting
capitalised wages
Net Capitalised
Wages
Adslot Publisher and Marketplace
Symphony
$
1,178,560
1,251,513
$
(530,352)
(563,181)
$
648,208
688,332
The Directors have assessed the accounting useful life of these internally developed software systems, for accounting
purposes, to be five years. This assessment has given regard to the expected financial benefits of the technology.
Domain names
Domain names opening carrying value of $38,267 (2016: $38,267) relates to the various domain names held by Webfirm
and Adslot. The Directors have assessed that this intellectual property has an indefinite useful life on the basis that the
Directors do not believe that there is a foreseeable limit on the period over which this asset is expected to generate cash
inflows for the entity.
Intellectual property
Adslot Technologies Pty Ltd (“Adslot”) holds valuable copyright and patent licences (“Licences”) in respect of Combinatorial
Auction Platform Technology (“CAP” or “Core IP”) owned by Enterprise Point Pty Ltd and its controlled entities
(“Enterprise”). $5,932,006 (2016: $5,932,006) of the opening balance relates to this “CAP” technology. Accumulated
amortisation of this asset as at 30 June 2017 was $5,932,006 (2016: $5,932,006). This asset has been fully amortised.
QDC IP Technology (“QDC”) is creative ad building and video advertising technology with licences to the Core IP valued
at $6,466,517 (2016: $6,466,517) in the opening balance and attached to the Adslot CGU. Accumulated amortisation of
this asset as at 30 June 2017 was $6,466,517 (2016: $5,904,904). This asset was fully amortised during the year.
The Symphony platform technology was acquired as part of the Facilitate Digital Holdings Limited acquisition. The fair
value attributable to the Symphony technology platform intellectual property was $16,191,496 (2016: $16,191,496).
Accumulated amortisation of this asset at 30 June 2017 was $11,413,471 (2016: $8,175,172). This asset has a remaining
useful life for accounting purposes of one and a half years.
The Facilitate for Agencies (“FFA”) platform technology was acquired as part of the Facilitate Digital Holdings Limited
acquisition. The fair value attributable to the FFA technology platform intellectual property was $455,231 (2016: $455,231).
Accumulated amortisation of this asset at 30 June 2017 was $407,545 (2016: $287,325). This asset has a remaining useful
life for accounting purposes of 3 months which is in line with the planned decommissioning of FFA product.
With the exception of FFA, the Directors have assessed the accounting useful life of all of the above technologies for
accounting purposes to be five years. This assessment has given regard to the expected financial benefits of the
technologies to be potentially well beyond a five year period, together with the risk that competitors could replicate these
technologies and in light of the Company’s ongoing commitment to research and development of the Core IP.
48
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Goodwill
The Goodwill balance relating to the acquisition of Facilitate has an attributed fair value of $15,161,939 and has not been
impaired.
a)
Cash Generating Units (CGUs)
For the purpose of impairment testing, goodwill has been allocated to the group of CGUs that are expected to benefit from
the acquisition, being both the Adslot and Symphony CGUs. A summary of the carrying amount of goodwill and intangible
assets with indefinite useful lives is detailed below:
CGU
2017
2016
Intangible assets
with indefinite
useful lives
$
Goodwill
$
Intangible assets
with indefinite
useful lives
$
Goodwill
$
Adslot and Symphony CGUs
15,161,939
-
15,161,939
-
b)
Impairment testing and key assumptions
The Group tests whether goodwill and other intangible assets have suffered any impairment in accordance with the Group’s
accounting policies. The recoverable amounts of assets and CGUs have been determined using a fair value less costs to
sell approach. The directors have assessed the fair value having regard to both an income based approach (discounted
cash flow projections), and market based approach, and both assessments have determined the goodwill is not impaired.
The most significant judgements and key assumptions pertaining to the cash flow projections are:
Conversion of a proportion of Symphony customers onto the Adslot platform resulting in significant revenue
generation through integration of these CGUs;
Expected growth from new customers;
Average fees generated from customers;
Post-tax discount rate of 18%.
The integration revenues remain a relatively new innovation for the Group, and accordingly the lack of historical revenues
across this platform has required the Group to make significant estimations of the revenue growth that can be reasonably
expected across the forecast period. The directors’ determination of fair value using a market based approach is the market
capitalisation of the Group, less the value attributed to business units that are not part of the group of CGUs attributed to
goodwill, less other net assets. This is based on level 2 inputs of the Fair Value Hierarchy as defined in AASB 13.
c)
Sensitivity analysis
Future net cash flows adopted for the income based approach are subject to the key assumptions noted above, which are
inherently uncertain given the nature of the business, and thus challenging to reliably forecast. A material adverse change
in the revenue projections would likely result in the carrying amount exceeding the recoverable amount.
There are no material sensitivities involved in the directors’ determination of fair value using a market based approach.
49
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Notes to the Financial Statements (Continued)
Trade and Other Payables
Trade creditors
Publisher creditors (i)
Other creditors
(i) Refer to Note 0(p) for further information on publisher creditors.
Other Liabilities
Current:
Unearned revenue (i)
2017
$
2016
$
417,008
807,179
1,028,394
293,196
1,252,220
1,431,111
2,252,581
2,976,527
2017
$
2016
$
583,759
583,759
557,878
557,878
(i) Unearned revenue relates to website development and hosting invoices that are rendered based on full contract
terms at the contracts’ inception, however performed over stages which straddle the reporting date, licence fees
billed in advance and advertising campaigns that have been purchased but whose delivery will occur after the
reporting date.
Provisions
Current:
Employee benefits
Non-current:
Employee benefits
2017
$
2016
$
605,590
457,522
325,473
315,587
50
For personal use only
Contributed equity
2017
Number
2016
Number
2017
$
2016
$
Ordinary Shares – Fully Paid
1,280,918,427
1,113,323,224
137,949,047
120,693,650
Ordinary shares participate in dividends and the proceeds on winding up of the parent entity in proportion to the numbers
of shares.
At the shareholders meeting each ordinary share is entitled to one vote when a poll is called, otherwise each shareholder
has one vote on a show of hands.
Movements in Paid-Up Capital
Date
Details
Number of
shares
Issue
price
Number
$
Capital
raising
costs
$
Value
$
01-Jul-15
Balance (including Treasury shares)
1,056,750,756
(1,252,222)
116,465,418
27-08-2015
Issue of shares – Performance Rights vesting
2,520,377
$0.074
(2,214)
184,294
13-04-2016 Share Placement
30-Jun-16
Less: Treasury shares
30-Jun16
Balance
57,500,000
$0.080
(217,620)
4,382,380
1,116,771,133
(3,447,909)
1,113,323,224
(1,472,056)
121,032,092
-
(338,442)
(1,472,056)
120,693,650
01-Jul-16
Balance (including Treasury shares)
1,116,771,133
(1,472,056)
121,032,092
01-09-2016
Issue of shares – Performance Rights vesting
3,424,524
$0.102
(3,781)
344,479
28-09-2016 Share Placement
24-10-2016 Rights Issue
30-Jun-17
Less: Treasury shares
30-Jun17
Balance
101,900,000
$0.110
(651,251)
10,557,749
62,233,112
$0.110
(492,681)
6,352,961
1,284,328,769
(3,410,342)
1,280,918,427
(2,619,769)
138,287,281
-
(338,234)
(2,619,769)
137,949,047
51
For personal use only
Notes to the Financial Statements (Continued)
14. Contributed equity (Continued)
Treasury Shares
Treasury shares are shares in Adslot Ltd that are held by the Adslot Employee Share Trust, which administers the Adslot
Employee Share Ownership Plan (ESOP). This Trust has been consolidated in accordance with Note 1(c). Shares held
by the Trust on behalf of eligible employees are shown as treasury shares in the financial statements. Shares issued
under this scheme will, subject to the provision of the Trust deed, rank equally in all respects and will have the same rights
and entitlements as ordinary shares under the Constitution of the Company.
Treasury Shares movements during the financial year are summarised below:
Issue Type
Issue or
Acquisition
Date
Employee ESOP
16/06/14
Employee ESOP
01/05/15
Employee ESOP
27/08/15
Employee ESOP
01/09/16
Issue
Price
$
0.105
0.090
0.080
0.125
Balance at
beginning of the
year
(Number)
1,000,000
2,342,775
135,134
-
3,477,909
Issued during
the year
(Number)
Transfers
during the year
(Number)
Balance at end of
the year (Number)
-
-
-
250,000
250,000
-
(200,000)
(67,567)
(50,000)
(317,567)
1,000,000
2,142,775
67,567
200,000
3,410,342
Rights over shares movements during the financial year are summarised below:
Issue Type
Rights over shares
Rights over shares
Rights over shares
Rights over shares
Required VWAP
Price $
Balance at
beginning of the
year (Number)
Granted during
the year
(Number)
Expired during
the year
(Number)
Vested during
the year
(Number)
Balance at the end of
the year (Number)
0.200
0.300
0.400
0.500
3,000,000
4,000,000
5,000,000
5,000,000
17,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,000,000
4,000,000
5,000,000
5,000,000
17,000,000
Performance rights movements during the financial year are summarised below:
Issue Type
Issue or
Acquisition
Date
Performance Rights
26/11/14
Performance Rights
26/08/15
Performance Rights
27/06/16
Performance Rights
01/09/16
Issue
Price
$
Nil
Nil
Nil
Nil
Balance at
beginning
of the year
(Number)
5,309,523
1,955,000
600,000
Issued during
the year
(Number)
Transfers
during the
year
(Number)
Forfeited
during the year
(Number)
Balance at end
of the year
(Number)
-
-
-
(3,059,524)
(2,249,999)
-
(365,000)
(500,000)
1,090,000
(200,000)
-
400,000
-
8,300,000
-
(550,000)
7,750,000
7,864,523
8,300,000
(3,624,524)
(3,299,999)
9,240,000
52
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Reserves
Reserves
Share–based payments reserve
Foreign currency translation reserve
Share–based payments reserve
Opening balance
Reclassification vested ESOP
Share based payment expense
Closing balance
Foreign currency translation reserve
Opening balance
Movement on currency translation
Closing balance
2017
$
279,117
110,812
389,929
2016
$
297,118
107,618
404,736
297,118
1,069,631
(348,468)
(1,212,651)
330,467
279,117
440,138
297,118
107,618
3,194
110,812
118,357
(10,739)
107,618
The Share-based payments reserve is used to record the value of options accounted for in accordance with AASB2: Share
Based Payments.
The foreign currency translation reserve is used to record the value of aggregate movements in the translation of foreign
currency in accordance with AASB 121: The Effects of Changes in Foreign Exchange Rates.
53
For personal use only
Notes to the Financial Statements (Continued)
Earnings Per Share
(a) Basic earnings per share
2017
Cents
2016
Cents
Loss attributable to the ordinary equity holders of the Company
(0.70)
(0.77)
(b) Diluted earnings per share
Loss attributable to the ordinary equity holders of the Company
(0.70)
(0.77)
(c) Reconciliation of earnings used on calculating earnings per share (i)
Loss from continuing operations attributable to the members of the Company used
on calculating basic and diluted earnings per share
(8,630,187)
(8,138,485)
2017
$
2016
$
(d) Weighted average number of shares used as the denominator
Weighted average number of shares on issue used in the calculation of basic EPS
1,235,331,383
1,062,178,629
2017
Number
2016
Number
(e) Weighted average number of shares used as the denominator
Weighted average number of shares on issue used in the calculation of diluted
EPS
1,235,331,383
1,062,178,629
(i) During 2017 and 2016 there were no discontinued operations or values attributable to minority interests.
2017
Number
2016
Number
Weighted average number of rights that could potentially dilute basic earnings
per share in the future, but are not included in the calculation of diluted EPS
because they are anti-dilutive for the period presented.
2017
Number
2016
Number
1,080,115
5,593,259
54
For personal use only
Contingencies
No contingent assets or liabilities are noted.
Commitments
Operating lease commitments
Total operating lease expenditure contracted for at reporting date but not
capitalised in the financial statements payable:
Within 1 year
Between 1 and 5 years
2017
$
2016
$
555,047
1,273,533
1,828,580
778,375
176,879
955,254
The lease commitments detailed above relate to rental premises and lease rental of printer/copiers.
Capital commitments
The Group and the Company have not entered any capital expenditure contracts at reporting date that are not recognised
as liabilities on the Statement of Financial Position.
Remuneration of auditors
During the year the following fees were paid/payable to the auditor of the Company:
Audit services
Audit and review of financial reports
During the year the following fees were paid/payable to a related entity of the auditor
of the company:
Other services
Taxation compliance, GroupM compliance audit, ASIC special purpose accounts for
Symphony International Solutions Limited and Research and Development grant
advice
2017
$
2016
$
109,000
109,000
64,300
13,500
173,300
122,500
55
For personal use only
Notes to the Financial Statements (Continued)
Key Management Personnel Disclosures
Directors
The following persons were directors of the Company during the financial year:
Mr Andrew Barlow (Non-Executive Chairman)
Mr Adrian Giles (Non-Executive Director)
Mr Ian Lowe (Executive Director & CEO)
Mr Ben Dixon (Executive Director)
Mr Geoff Dixon (Non-Executive Director)
Resigned 01 December 2016
Mr Quentin George (Non-Executive Director)
Ms Sarah Morgan (Non-Executive Director)
Other key management personnel
The following persons also had authority and responsibility for planning, directing and controlling the activities of the Group,
directly or indirectly, during the financial year:
Name
Mr Brendan Maher
Mr Tom Peacock
Position
Chief Financial Officer and Company Secretary
Group Commercial Director
Key management personnel compensation
Short-term employee benefits
Post-employment benefits
Other long-term employee benefits (i)
Share based payments
Total compensation (a)
2017
$
1,338,681
92,669
(4,603)
72,774
2016
$
1,271,191
96,094
22,342
249,666
1,499,521
1,639,293
(i) Other long-term employment benefits include a long service leave provision reversal brought forward from 2016 in
relation to Mr. Brendan Maher. He tendered his resignation in April 2017, as such will not be entitled to any long service
leave payout based on Long Service Leave Act 1992 No. 83 of the Victoria State legislation.
a) There were 9 key management personnel throughout 2017, some of whom have a part year of service (2016: 9).
Business Acquisitions:
There were no related party transactions during the year ended 30 June 2017.
Transactions with Directors and their personally related entities:
During the year there were no transactions with Directors and their personally related entities. 2016 included revenue to
the value of $353 from a Publisher related to Mr Ben Dixon and Mr Geoff Dixon on normal commercial terms and conditions.
56
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Share Based Payments
Employee Share Ownership Plan (ESOP)
In November 2012 the Company gained approval to establish an employee incentive scheme comprising the Adslot Limited
Share Option Plan and the Adslot Employee Share Trust.
Awards of rights to shares are available to be issued to eligible employees based on the performance against agreed key
performance indicators. Any rights awarded are subject to a two-year service period and if this service period is not met,
the rights to shares will be forfeited by the eligible employee. Shares held by the Trust under the scheme will have voting
and dividend rights, and the right to participate in further issues pro-rata to all ordinary shareholders.
The following tables shows grants of share-based compensation to employees under the ESOP for the current financial
year and the model inputs:
2017
Grant
Date
Escrow
End Date
Valuation
Price $
Balance at
start of the
year
Granted
during
the year
Transferred
during the
year
Forfeited
during
the year
(Number)
(Number)
(Number)
(Number)
15/06/14
15/06/15
15/06/14
2016-2018
27/08/15
07/09/16
27/08/15
07/09/17
Total
0.105
0.105
0.080
0.080
250,000
750,000
67,567
67,567
1,135,134
Weighted average share price
$0.102
-
-
-
-
-
-
-
-
(67,567)
-
(67,567)
$0.080
-
-
-
-
-
-
Balance at
end of the
year
(Number)
Vested at
the end
of the
year
(Number)
250,000
250,000
750,000
499,992
-
67,567
-
-
1,067,567
749,992
$0.103
$0.105
Weighted average remaining contractual life at 30 June 2017 (days)
159
No ESOP rights to shares were granted during the year ended 30 June 2017
2016
Grant
Date
Escrow
End Date
Valuation
Price $
09/07/13
09/07/15
05/09/13
05/09/15
24/12/13
24/12/15
28/01/14
24/01/16
06/03/14
04/03/16
15/06/14
15/06/15
15/06/14
2016-2018
10/07/14
08/07/16
08/09/14
07/09/16
10/07/15
09/07/17
27/08/15
07/09/16
27/08/15
07/09/17
0.042
0.061
Converted
Right
0.120
0.090
0.105
0.105
0.100
0.155
0.086
0.080
0.080
Balance at
start of the
year
Granted
during
the year
Transferred
during the
year
Forfeited
during
the year
(Number)
(Number)
(Number)
(Number)
Balance at
end of the
year
(Number)
Vested at
the end
of the
year
(Number)
666,667
2,902,935
3,000,000
176,928
4,845,045
250,000
750,000
666,667
96,523
-
-
-
-
-
-
-
-
-
-
-
-
666,666
67,567
67,567
(666,667)
-
(2,889,153)
(13,782)
-
-
-
-
-
-
-
-
-
-
250,000
250,000
750,000
249,996
-
-
-
-
-
(666,667)
(96,523)
(666,666)
-
-
-
-
-
67,567
67,567
-
-
-
-
-
(3,000,000)
(176,928)
(4,845,045)
-
-
-
-
-
-
-
Total
13,354,765
801,800
(11,577,793)
(1,443,638)
1,135,134
499,996
Weighted average share price
$0.064
$0.085
$0.083
$0.097
$0.102
$0.105
Weighted average remaining contractual life at 30 June 2016 (days)
341
57
For personal use only
Notes to the Financial Statements (Continued)
21. Share Based Payments (Continued)
The model inputs for ESOP rights to shares granted during the year ended 30 June 2016 included:
Model Input
Grant Date
Escrow End Date
Exercise Price
Price at Grant Date
ESOP #16-1
ESOP #16-3
ESOP #16-3
10/07/15
08/07/17
-
$0.086
27/08/15
07/09/16
-
$0.08
27/08/15
07/09/17
-
$0.08
ESOP rights to shares are valued using the Binomial option-pricing model.
The volatility calculation is based upon historical share price information for the same period as the option life to the date
that the options were granted.
Performance Rights over Shares
Shareholders approved at the November 2014 Annual General Meeting the creation of Performance Rights over Shares
which enables the Board to offer eligible employees the right to Performance Rights which convert to shares subject to the
employee’s performance against certain performance criteria. No amounts are paid or payable by the recipient on receipt
of the right. The rights carry no voting rights. All rights are subject to service periods which require the employees remain
an employee of the Company.
The following table shows grants and movements of share-based compensation to employees under the Performance
Rights over Shares Plan during the current financial year:
Granted
during the
year
Transferred
during the
year
Forfeited
during the
year
(Number)
(Number)
(Number)
Balance at
end of the
year
(Number)
Vested at
the end of
the year
(Number)
Balance at
start of the
year
(Number)
5,309,523
1,955,000
600,000
Grant
Date
Assessment
period
Valuation
Price $
26/11/14
26/08/15
27/06/16
01/09/16
01/09/16
Total
2 years
2 years
2 years
1 year
2 years
0.105
0.074
0.100
0.125
0.125
-
-
-
(3,059,524)
(2,249,999)
-
(365,000)
(500,000)
1,090,000
(200,000)
-
-
-
-
400,000
250,000
(550,000)
7,500,000
-
-
250,000
8,050,000
7,864,523
8,300,000
(3,624,524)
(3,299,999)
9,240,000
The model inputs for Performance Rights to shares grated during the year ended 30 June 2017 included:
Model Input
Grant Date
Assessment Period
Exercise Price
Probability of Conversion to Shares
PR # 17-1
PR # 17-2
PR # 17-3
PR # 17-4
01/09/16
2 years
-
50%
01/09/16
2 years
-
50%
01/09/16
2 years
-
10%
01/09/16
1 year
-
25%
Price at Grant Date
$0.125
$0.125
$0.125
$0.125
-
-
-
-
-
-
58
For personal use only
The Performance Rights over Shares issued in 2016.
Grant
Date
Assessmen
t period
Valuation
Price $
Balance at
start of the
year
(Number)
Granted
during
the year
Transferred
during the
year
Forfeited
during the
year
(Number)
(Number)
(Number)
2 years
2 years
2 years
0.105
0.074
0.100
10,750,000
-
(2,520,377)
(2,920,100)
-
-
2,660,000
600,000
-
-
(705,000)
-
26/11/14
26/08/15
27/06/16
Total
Balance at
end of the
year
(Number)
5,309,523
1,955,000
600,000
Vested at
the end of
the year
(Number)
-
-
-
-
10,750,000
3,260,000
(2,520,377)
(3,625,100)
7,864,523
The model inputs for Performance Rights to shares grated during the year ended 30 June 2016 included:
Model Input
Grant Date
Assessment Period
Exercise Price
Probability of Conversion to Shares
PR # 16-1
PR # 16-2
PR # 16-3
PR # 16-4
26/08/15
2 years
-
10%
26/08/15
2 years
-
20%
26/08/15
2 years
-
25%
27/06/16
2 years
-
50%
Price at Grant Date
$0.074
$0.074
$0.074
$0.100
Rights over Shares
Upon commencement of employment (8 October 2012) Mr Lowe was granted the right to receive the following shares after
the share price of the Company trades above a 30 day volume-weighted average price (VWAP) as per the table below.
Each right would convert into one ordinary share of Adslot Ltd when the VWAP criteria is met. In the event of a Change
of Control of the Company some of these Rights would vest on a sliding scale between the take over price and required
VWAP of the next eligible series.
No amounts are paid or payable by the recipient on receipt of the right. The rights carry no voting rights. Some rights are
subject to escrow per the below table and all rights are subject to Mr Lowe remaining an employee of the Company.
No Rights over Shares were issued in 2017. The following table shows movement in the Rights over Shares for the current
financial year:
The following table shows movement in the Rights over Shares for the current financial year (no change in the last two
financial years):
Required
VWAP
Price
Issue Date
$
8-Oct-2012
8-Oct-2012
8-Oct-2012
8-Oct-2012
Total
0.20
0.30
0.40
0.50
Escrow
Required
from
award
2 years
-
-
-
Balance at
start of the
year
Granted
during the
year
Vested
during
the year
Forfeited
during
the year
Valuation
Price
$
(Number)
(Number)
(Number)
(Number)
64,500
66,000
73,000
63,500
3,000,000
4,000,000
5,000,000
5,000,000
267,000
17,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Balance at
end of the
year
(Number)
3,000,000
4,000,000
5,000,000
5,000,000
17,000,000
59
For personal use only
Notes to the Financial Statements (Continued)
Cash Flow reconciliation
Reconciliation of Net Cash Flows from Operating Activities to Loss for the year
Loss for the year after income tax
Depreciation and amortisation
Share based payment
Impairment of receivables
(Profit)/Loss on asset write off
Unrealised foreign currency loss / (gain)
Movements in receivables relating to investing activities
Changes in assets and liabilities (net of effects of acquisition and disposal of entities)
(Increase)/Decrease in receivables
(Decrease)/Increase in payables and other provisions
2017
$
2016
$
(8,630,187)
(8,138,485)
4,685,082
4,930,957
330,467
440,138
17,747
(2,549)
8,240
28,240
1,624
22,250
338,771
(132,744)
(329,634)
(540,111)
74,415
20,938
Net cash outflow from operating activities
(4,122,174)
(2,752,667)
Financial Risk Management
The Group’s operations expose it to various financial risks including market, credit, liquidity and cash flow risks. Risk
management programmes and policies are employed to mitigate the potential adverse effects of these exposures on the
results of the Group.
Financial risk management is carried out by the Chief Financial Officer with oversight provided by the Audit & Risk
Committee and Board.
a)
Market risks
Market risks include foreign exchange risk, interest rate risk and other price risk. The Group’s activities expose it to the
financial risks of changes in foreign currency, interest rate risk relating to interest earned on cash and cash equivalents.
Disclosures relating to foreign currency risks are covered in Note 23(d) and interest rate risk is covered in Note 23(e). The
Group does not have formal policies that address the risks associated with changes in interest rates or changes in fair
values on available-for-sale financial assets.
b)
Credit risk
Credit risk represents the loss that would be recognised if counterparties failed to perform as contracted.
The credit risk on financial assets, other than investments, of the Group which have been recognised in the Consolidated
Statement of Financial Position is the carrying amount net of any provision for doubtful debts.
The Group has no significant concentrations of credit risk. As disclosed in Note 8(a), ‘Impairment of receivables’, the Group
has policies in place to ensure that sales of services are made to customers with appropriate credit history. Before
accepting any new customers, the Group internally reviews the potential customer’s credit quality. A substantial deposit
on contract in website development and hosting segment of the Group mitigates initial credit risk.
The Group held the following financial assets with potential credit risk exposure:
Financial assets
Cash and cash equivalents
Trade debtors and Other receivables (Note 8)
2017
$
14,320,147
4,685,621
2016
$
4,745,969
4,291,602
19,005,768
9,037,571
60
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c)
Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding
through an adequate amount of committed credit facilities and the ability to close-out market positions. Due to the dynamic
nature of the underlying business, the Board aims at maintaining flexibility in funding by keeping committed credit lines and
sufficient cash available.
All financial liabilities are expected to be settled within 12 months of the reporting date, per the contractual terms of the
obligations.
Financial liabilities
Trade and other payables
d)
Foreign currency risk
2017
$
2,252,581
2016
$
2,976,527
Most of the Group’s transactions are carried out in Australian Dollars (AUD). Exposures to currency exchange rates arise
from the Group’s overseas operations which are primarily denominated in US dollars (USD), Pound Sterling (GBP), Euros
(EUR), New Zealand dollars (NZD), Chinese Yuan (CNY) and Malaysian Ringgit (MYR).
Foreign currency exposure is monitored by the Board on a monthly basis.
Foreign currency denominated financial assets and liabilities which expose the Group to currency risk are disclosed below.
The amounts shown are those reported to key management translated into AUD at the closing rate:
USD
A$
GBP
A$
EUR
A$
NZD
A$
CNY
A$
MYR
A$
30 June 2017
Financial Assets
Financial Liabilities
Total Exposure
30 June 2016
1,337,881
(468,983)
868,898
207,753
(167,148)
40,605
Financial Assets
905,527
374,099
Financial Liabilities
(667,983)
(280,936)
Total Exposure
237,544
93,163
30,483
(24,221)
6,262
119,800
(34,392)
85,408
54,144
(43,490)
10,654
99,372
(48,840)
50,532
25,103
(23,432)
1,671
61,808
(16,752)
45,056
9,165
-
9,165
612
-
612
The following table illustrates the sensitivity on profit and equity in relation to the Group’s financial assets and liabilities
and the USD/AUD exchange rate, GBP/AUD exchange rate, EUR/AUD exchange rate, NZD/AUD exchange rate and
CNY/AUD exchange rate ‘all other things being equal’. It assumes a +/- 10% change of the following exchange rates for
the year ended 30 June 2017 (30 June 2016:10%).
These percentages have been determined based on the average market volatility in exchange rates in the previous 12
months. There is no Equity exposure to foreign currency risk.
30 June 2017
Impact on Profit
Impact on Reserves
Impact on Equity
30 June 2016
Impact on Profit
Impact on Reserves
Impact on Equity
30 June 2017
Impact on Profit
Impact on Reserves
Impact on Equity
30 June 2016
Impact on Profit
Impact on Reserves
Impact on Equity
USD
A$
(46,353)
(32,638)
(78,991)
GBP
A$
4,151
(7,842)
(3,691)
9,020
(30,615)
(21,595)
17,239
(25,708)
(8,469)
USD
A$
56,653
39,891
96,544
GBP
A$
(5,074)
9,586
4,512
(11,024)
37,418
26,394
(21,070)
31,421
10,351
EUR
A$
(363)
(206)
(569)
(1,438)
(6,326)
(7,764)
EUR
A$
443
253
696
1,757
7,733
9,490
+10%
NZD
A$
6
(975)
(969)
302
(4,896)
(4,594)
-10%
NZD
A$
(7)
1,191
1,184
(369)
5,984
5,615
CNY
A$
102
(254)
(152)
(3,441)
(655)
(4,096)
CNY
A$
(124)
310
186
4,205
801
5,006
MYR
A$
(833)
-
(833)
Total
A$
(43,290)
(41,915)
(85,205)
(56)
-
(56)
21,626
(68,200)
(46,574)
MYR
A$
1,018
-
1,018
Total
A$
52,909
51,231
104,140
68
-
68
(26,433)
83,357
56,924
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Notes to the Financial Statements (Continued)
23.
Financial Risk Management (Continued)
e)
Cash flow and interest rate risk
As the Group has no significant interest-bearing assets or liabilities (except cash), the Group’s income and operating cash
flows are not materially exposed to changes in market interest rates.
Interest rate sensitivity analysis
The sensitivity analysis below has been determined based on exposure to interest rates on interest bearing bank balances
throughout the reporting period. A 100 basis point increase or decrease is used when reporting interest rate risk internally
to key management personnel and represents management’s assessment of the possible change in interest rates (also
comparable to movement in interest rates during the reporting year).
At reporting date, if interest rates had been 100 basis points higher or lower and all other variables were held constant, the
Group’s net profit would:
+1%
$
-1%
$
30 June 2017
138,479
(136,171)
30 June 2016
31,184
(29,162)
This is mainly attributable to the Group’s exposure to interest rate on its bank balances bearing interest.
f)
Net fair value of financial assets and liabilities
The net fair value of cash and cash equivalents and other short-term financial assets and financial liabilities of the Group
approximates their carrying value.
The net fair value of other financial assets and financial liabilities is based upon market prices where a market exists or by
discounting the expected future cash flows by the current interest rates for assets and liabilities with similar risk profiles.
Parent Entity Information
The following details of information are related to the parent entity, Adslot Ltd, at 30 June 2017. This information has
been prepared using consistent accounting policies as presented in Note 01.
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Contributed equity
Share-based payments reserve
Retained losses
Total equity
Loss for the year
Total comprehensive loss for the year
2017
$
12,808,996
2016
$
3,496,229
44,289,745
44,261,447
57,098,741
47,757,676
236,351
133,372
-
-
236,351
133,372
138,287,281
121,032,092
279,115
297,118
(81,704,006)
(73,704,906)
56,862,390
47,624,304
(7,999,100)
(4,930,858)
(7,999,100)
(4,930,858)
The Commitments Note 18 includes commitments by the parent entity related to leases of the head office premises; at 85
Coventry Street, South Melbourne (one week) and 419 Collins Street, Melbourne (58 ½ months) for an amount of
$1,565,583 (2016: $299,452).
62
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Related Party Transactions
Other than the transactions disclosed in Note 20 relating to key management personnel, there have been no related party
transactions that have occurred during the current or prior financial year.
Events Subsequent to Reporting Date
There has not been any matter or circumstance occurring subsequent to the end of the financial year that has significantly
affected, or may significantly affect, the operations of the Group, the results of those operations or the state of affairs of
the Group in future years.
Consolidated Entities
Name
Parent entity
Adslot Ltd
Controlled entities
Adslot Technologies Pty Ltd
Ansearch.com.au Pty Ltd
Ansearch Group Services Pty Ltd
Webfirm Pty Ltd
Adimise Pty Ltd (a)
Full Circle Online Pty Ltd (b)
QDC IP Technologies Pty Ltd
Adslot UK Limited
Adslot Inc.
Symphony International Solutions Limited
Symphony Workflow Pty Ltd
Symphony Media Pty Ltd
Facilitate Digital (Shanghai) Software Services Co. Ltd
Facilitate Digital Limited
Facilitate Digital Trust
Facilitate Digital, LLC
Facilitate Digital UK Limited
Facilitate Digital Deutschland GmbH
Facilitate Digital Europe Marketing Technology Ltd (c)
Country of
Incorporation
Ordinary Share
Consolidated Equity Interest
2017
%
2016
%
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
United Kingdom
United States
Australia
Australia
Australia
China
New Zealand
New Zealand
United States
United Kingdom
Germany
Republic of Ireland
100
100
100
100
-
-
100
100
100
100
100
100
100
100
100
100
100
100
-
(a)
(b)
(c)
Adimise Pty Ltd was deregistered on 05 October 2016.
Full Circle Online Pty Ltd was deregistered on 05 October 2016.
Facilitate Digital Europe Marketing Technology Ltd was deregistered on 09 June 2017.
Equity interests in all controlled entities are by way of ordinary shares.
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
63
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Directors’ Declaration
The directors declare that the financial statements, comprising the statement of profit or loss and other comprehensive
income, statement of financial position, statement of changes in equity, statement of cash flows, accompanying notes, as
set out on pages 26 to 63 are in accordance with the Corporations Act 2001 and:
(a) comply with Australian Accounting Standards, the Corporations Regulations 2001 and other mandatory
professional reporting requirements in Australia;
(b) give a true and fair view of the group’s financial position as at 30 June 2017 and of its performance, as represented
(c)
by the results of its operations and its cash flows, for the financial year ended on that date; and
the company has included in the notes to the financial statements an explicit and unreserved statement of
compliance with International Financial Reporting Standards.
In the directors’ opinion:
(a) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become
due and payable.
(b) the audited remuneration disclosures set out on pages 17 to 24 of the Directors’ Report comply with section 300A
of the Corporations Act 2001.
The directors have been given the declaration by the Chief Executive Officer and Chief Financial Officer required by section
295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the directors.
Andrew Barlow
Chairman
Adslot Ltd
28 August 2017
64
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Independent Audit Report to the Members
The Rialto, Level 30
525 Collins St
Melbourne Victoria 3000
Correspondence to:
GPO Box 4736
Melbourne Victoria 3001
T +61 3 8320 2222
F +61 3 8320 2200
E info.vic@au.gt.com
W www.grantthornton.com.au
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF ADSLOT LIMITED
Report on the audit of the financial report
Opinion
We have audited the financial report of Adslot Limited (the Company) and its subsidiaries (the Group), which
comprises the consolidated statement of financial position as at 30 June 2017, the consolidated statement of
profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated
statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a
summary of significant accounting policies, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group, is in accordance with the Corporations Act 2001,
including:
a Giving a true and fair view of the Group’s financial position as at 30 June 2017 and of its performance for the
year ended on that date; and
b Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of
our report. We are independent of the Group in accordance with the independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial
report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of
the financial report of the current period. These matters were addressed in the context of our audit of the financial
report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant
Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered
by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another’s acts or omissions. In the Australian context
only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton
Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation.
65
For personal use only
Independent Audit Report to the Members (Continued)
Key audit matter
How our audit addressed the key audit matter
Goodwill and intangible balances
Note 10
At 30 June 2017, the Group’s statement of financial position
includes goodwill and other intangibles amounting to $25m.
AASB 136 Impairment of Assets requires that an entity shall
assess at the end of each reporting period whether there is any
indication that an asset may be impaired. If any indication
exists, the entity shall estimate the recoverable amount of the
asset.
Assessing whether there is any indication that an asset may be
impaired involves a high degree of judgement relating to factors
such as discount rates, current work in hand and future contract
success, as well as economic assumptions such as inflation
and foreign currency rates.
Management developed an impairment model which factored
in forecast discounted cashflows, growth assumptions around
revenue and expenses. An impairment is likely to occur when
the forecast value is lower than the carrying value of the
intangible.
The group financials also include Goodwill of $15m which has
been assessed for impairment using the fair value method.
This area is a key audit matter due to the degree of judgement
required and the subjectivity relating to assumptions and key
inputs.
Research & development grants and capitalised wages
Note 1(v)
The Group continues
the
development of technology, and the Group claims associated
research and development (R&D) grants from AusIndustry
under the R&D Tax Incentive Scheme.
incur costs
investing
to
in
Intangible Assets has set criteria
AASB 138
the
capitalisation of expenses. During the year, the Group has
capitalised development costs as intangible assets to the value
of $2.6m.
for
AASB 120 Accounting for Government Grants and Disclosure
of Government Assistance require grants received relating to
costs that are capitalised to be offset against the capitalised
amount, and grants relating to costs that are not capitalised
expenses to be recognised as income. A receivable is
recognised for R&D grant claims submitted but not yet received
pertaining to costs incurred in the previous financial year, and
for the estimated R&D grant claim pertaining to costs incurred
during the 2017 financial year. At year-end, the Group has
recognised a receivable for submitted and estimated R&D grant
claims for $2.7m.
This area is a key audit matter due to the level of judgement
and estimation required by management in accounting for such
activities.
Our procedures included, amongst others:
reviewing the model for compliance with AASB 136
Impairment of Assets;
assessing managements determination of Cash Generating
Units (CGUs) based on our understanding of how
management monitors the Group's operations and makes
decisions about groups of assets that generate independent
cash flows;
testing the mathematical accuracy and appropriateness of
the methodology of the underlying model calculations;
evaluating the cash flow projections and the process by
which they were developed;
assessing the key growth rate assumptions by comparing
them to historical results, economic and industry forecasts;
engaging experts to assist in assessing discount rate
applied with reference to the cost of capital of the Group;
performing sensitivity analysis of the key assumptions in
model;
assessing the adequacy of disclosures in the financial
statements; and
evaluating the methodology and basis of the market based
approach.
Our procedures included, amongst others:
comparing the methodology and nature of the expenditure
included in the current year estimate of the R&D incentive
calculation to the prior period claim;
the Group’s compliance with criteria for capitalisation of
costs under AASB 138;
assessing the reasonableness of total development costs
against expectations, having regard to prior year costs and
current year budgeted costs;
agreeing a sample of R&D costs incurred to underlying
supporting documentation;
tracing the R&D receivable to submitted claims and where
applicable, subsequent cash receipt;
testing the mathematical accuracy of R&D grant claims
accrued for;
inspecting copies of
relevant correspondence with
AusIndustry and the ATO related to the claims history; and
reviewing relevant disclosures in the financial statements.
66
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Information Other than the Financial Report and Auditor’s Report Thereon
The Directors are responsible for the other information. The other information comprises the information included
in the Group’s annual report for the year ended 30 June 2017, but does not include the financial report and our
auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the financial report or our knowledge
obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact.
Responsibilities of the Directors for the Financial Report
The Directors of the Company are responsible for the preparation of the financial report that gives a true and fair
view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal
control as the Directors determine is necessary to enable the preparation of the financial report that gives a true
and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the Directors are responsible for assessing the Group’s ability to continue as a
going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the Directors either intend to liquidate the Group or to cease operations, or have no realistic
alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing and
Assurance Standards Board website at:
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This description forms part of our auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 17 to 24 of the directors’ report for the year ended
30 June 2017.
In our opinion, the Remuneration Report of Adslot Limited, for the year ended 30 June 2017, complies with
section 300A of the Corporations Act 2001.
67
For personal use only
Independent Audit Report to the Members (Continued)
Responsibilities
The Directors of the Company are responsible for the preparation and presentation of the Remuneration Report
in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on
the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
Michael Climpson
Partner
Melbourne, 28 August 2017
68
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Corporate Governance Statement
In accordance with Listing Rule 4.10.3 Adslot’s Corporate Governance Statement can be found at:
http://www.adslot.com/investor-relations/corporate-governance/
Shareholder Information
Additional information required by the Australian Securities Exchange Limited and not shown elsewhere in this report is
as follows. The information is current as at 24 August 2017.
Distribution of equity securities
The number of shareholders by size of shareholding are:
Ordinary Shares
Number of Holders Number of Shares
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 +
TOTAL
The number of shareholders holding less than a marketable parcel of
shares 9,616 shares:
Twenty largest shareholders
The names of the twenty largest holders of quoted shares are:
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
NATIONAL NOMINEES LIMITED
DAWNIE DIXON PTY LTD
J P MORGAN NOMINEES AUSTRALIA LIMITED
INVIA CUSTODIAN PTY LIMITED
BNP PARIBAS NOMINEES PTY LTD
AMBLESIDE VENTURES PTY LTD
VENTURIAN PTY LTD
ANDAMA HOLDINGS PTY LTD
DAK DRAFTING SERVICES PTY LTD
MR PETER JOHN DIAMOND + MRS DIANA ELIZABETH DIAMOND
RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED
WASHINGTON H SOUL PATTINSON AND COMPANY
MR RICHARD ARMSTRONG CALDOW
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
MR VLADIMIR ANTHONY VITEZ & MS CATHERINE MARY DOWLAN
G & D DIXON INVESTMENTS PTY LTD
GWYNVILL TRADING PTY LTD
CAPITAL ACCRETION PTY LTD
CITICORP NOMINEES PTY LIMITED
INVIA CUSTODIAN PTY LIMITED
Total Top 20 holders of Ordinary Shares
Remaining holders balance
Classes of Shares
Adslot Ltd has only one class of share on issue, being fully paid ordinary shares.
Substantial Shareholders
Geoff Dixon
Voting Rights
All ordinary shares carry one vote per share without restrictions.
202
386
629
1,723
1,045
3,985
1,026
22,357
1,321,742
5,041,480
68,562,103
1,209,381,087
1,284,328,769
4,476,978
Listed Ordinary Shares
Number of
Shares
% of
Shares
106,106,105
76,046,522
70,748,987
49,992,850
33,759,806
33,091,710
32,916,154
29,000,000
24,000,000
18,000,000
17,111,741
16,178,054
16,000,000
15,374,093
12,500,000
12,302,184
10,939,395
10,000,000
9,876,291
9,689,841
603,633,733
680,695,036
8.26
5.92
5.51
3.89
2.63
2.58
2.56
2.26
1.87
1.40
1.33
1.26
1.25
1.20
0.97
0.96
0.85
0.78
0.77
0.75
47.00
53.00
Shares % Shares
89,845,849
7.00%
69
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Corporate Directory
Directors
Mr Andrew Barlow – Chairman
Mr Ian Lowe – Executive Director
Mr Ben Dixon – Executive Director
Mr Adrian Giles – Non-Executive Director
Mr Quentin George – Non Executive Director
Ms Sarah Morgan – Non Executive Director
Chief Executive Officer
Mr Ian Lowe
Company Secretary
Mr Ben Dixon
Auditors
Grant Thornton Australia
The Rialto
Level 30, 525 Collins Street
Melbourne VIC 3000 Australia
Bankers
National Australia Bank Limited
330 Collins Street,
Melbourne VIC 3000 Australia
Share Register
Computershare Registry Services Pty Ltd
Yarra Falls
452 Johnston Street
Abbotsford, VIC 3001 Australia
Home Stock Exchange
Australian Securities Exchange Limited
Level 45, South Tower
Rialto, 525 Collins Street
Melbourne, VIC 3000 Australia
ASX Code: ADJ
Website
www.adslot.com
Registered Office
Adslot Ltd
Level 2, 419 Collins Street,
Melbourne VIC 3000 Australia
Phone: + 61 3 8695 9100
Fax: + 61 3 9696 0700
Head Office
Adslot Ltd
Level 2, 419 Collins Street,
Melbourne VIC 3000 Australia
Phone: + 61 3 8695 9100
Fax: + 61 3 9696 0700
Asia Pacific Offices
Level 6, 241 Commonwealth Street
Surry Hills NSW 2010
Australia
1-231, Shanghai 1933
No 10 Shajing Road
Shanghai 200080
China
301S Botany Road
Botany Downs, Auckland
New Zealand
North America Offices
373 Park Avenue South, 4th Floor
New York, NY 10016
United States of America
European Offices
79 Wardour Street
Soho, London W1D 6QB
United Kingdom
Hamburg Business Center
Poststrasse 33
20354 Hamburg
Germany
70
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For personal use only